AVK, BTZ, CLPR, CTO, DCOM, DEA, FSK, ICMB, JQC, OHI, QYLD, PFLT, SLRC

Economy: 

May CPI = .1%

May Core CPI = .4% led higher by shelter

Annual CPI (not seasonally adjusted) = 4%, down from 4.9% in April 2023. 

Annual Core CPI (not seasonally adjusted): 5.3%

Consumer Price Index Summary - 2023 M05 Results

I generally discount the owner equivalent rent, part of the  shelter component, that is weighted at 25.432% in CPI and increased by 8% year-over-year. The weighting will be more in core CPI which excludes energy and food costs.  

That inflation number pretends that  homeowners rent their homes from themselves. 

I have owned my home since 1982. It would be just ridiculous to say that I incurred an 8% annual rent increase through April 2023 to reside in the home that I own free and clear of any debt. Home price inflation only translates  into more profit when I sell the home. 

Owner equivalent rent is primarily relevant to those buying their first home rather than existing homeowners where inflation in house prices increases the value. 

In a 6/13/23 WSJ article, the author noted that the average of "six national rental-price measures from rental-listing and property data companies show ne-lease asking rents rose just under 2% over the 12 months" ending in May".  Renters Are About to Get the Upper Hand - WSJ (subscription publication) 

As expected, the FED left the FF rate unchanged but indicated that more rate increases may be needed later in the year. 

New Economic Projections: 

The FED increased it median prediction for 2023 core PCE inflation to 3.9% from the 3.6% projection made in March. The median forecast for 2023 real GDP growth was revised up to 1% from .4%. The average annual projected real GDP growth rate remained tepid in the 2023-2025 time frame. The median forecast for the 2023 year end FF rate was revised up from 5.1% to 5.6%.  

Dot Plot: 12 FED members expect that the midpoint FF rate will be 5.625% or higher by year end. 

While the Stock Jocks acted surprised in their immediate response to this release, I did not find it surprising. The FED is still saying that more rate increases will be necessary if inflation rate remains problematic. 

The probability of a .25% FF rate increase next month (7/26 meeting) currently stands at 74.4%. CME FedWatch Tool - CME Group

The FED may be making yet another mistake by raising rates again this year. Money supply growth was a key contributor to inflation in 2022 and is now declining. And, the FED has not given enough time for the rate increases so far to work. 

The M2 money supply has fallen 4.63% over the past year and has declined for 9 consecutive months using the seasonally adjusted numbers. 

Federal Reserve Board - Money Stock Measures - H.6 - May 23, 2023 

Using that measure, the Fed's monetary policy is tight. Many economists believe that the rapid surge in money supply led to the inflation surge starting in early 2021. Inflation has Federal Reserve critics pointing to money supply surge - The Washington Post (1/6/22 article)

Inflation will continue to come down with the shrinking money supply, says former Fed Gov. Heller - YouTube I discussed Heller's opinion about how money growth in 2021 will accelerate inflation in a January 2022 post, citing A Grim History Repeats at the FED-Barron's (originally published 1/21/22); (1/27/22 Post) Money supply was increased from $15 trillion in January 2020 to $21 trillion in November 2021.  

M2 Money Supply Growth vs. Inflation-154 Year Chart Note the substantial growth in M2 in 2020-2021

The surge in M2 money supply growth did play an important role in creating problematic inflation in 2022. 

Given the inherent complexities and the existence of other conditions that caused inflationary pressures starting with the pandemic and its aftermath, it is not possible to assign a specific percentage to just one cause. 

The M2 money supply growth IMO, which was far greater than needed in the economy, was responsible for more than 1/2 of the 2022 annual inflation rate of 8%. Consumer Price Index, 1913- | Federal Reserve Bank of Minneapolis 

The decline in M2 money supply over the past 9 months has played an important role in inflation's downward trend from the 2022 peak levels. 

European Central Bank raises rates by 25 basis points at June 2023 meeting The new rate is 3.5%, which IMO will have no impact on inflationary pressures. Where is the historical example where that kind of benchmark rate had the desired impact on problematic inflation? There is none.   

The Federal Reserve, ECB, and other central banks allowed problematic inflation to gain a foothold through continuing extremely abnormal monetary policies when it was obvious in 2021 that inflationary pressures were building. The FED engineered surge in money supply in 2021 played an important role in creating problematic inflation. 

Chart Links: 

Light Weight Vehicle Sales: Autos and Light Trucks - St. Louis Fed

New Privately-Owned Housing Units Started: Total Units- St. Louis Fed

New One Family Houses Sold: United States-St. Louis Fed

S&P/Case-Shiller U.S. National Home Price Index- St. Louis Fed

Mortgage Debt Service Payments as a Percent of Disposable Personal Income -St. Louis Fed

Rail Freight Carloads - St. Louis Fed

Truck Tonnage Index-St. Louis Fed

Real personal consumption expenditures per capita- St. Louis Fed

Leading Index for the United States-St. Louis Fed

Unemployment Rate-St. Louis Fed

Total Unemployed, Plus All Persons Marginally Attached to the Labor Force, Plus Total Employed Part Time for Economic Reasons, as a Percent of the Civilian Labor Force Plus All Persons Marginally Attached to the Labor Force (U6 RATE)-St. Louis Fed

Real Median Household Income in the United States- St. Louis Fed

Stock Market Valuation Indicators: 

Is the Market Still Overvalued? - dshort - Advisor Perspectives

S&P 500 PE Ratio and  Shiller PE Ratio 1871 to Date | Longtermtrends

The Buffett Indicator: Market Cap to GDP - Updated Chart | Longtermtrends

Q-Ratio Unchanged in May - dshort - Advisor Perspectives

+++

Allocation Shifts Discussed in this Post: 

Treasury Bills: $10,000 in principal amount

Corporate Bonds: $7,000 in principal amount 

CDs: $6,000

Common Stocks: +$159.23

(consisting of $695.09 in purchases minus $535.86 in proceeds)

Weighted Yield of Common Stock Purchases: 10.63%

Stock ETFs:  +$88.99 (yield at 11.215% based on TTM dividend payments)

CEFs (AVK, BTZ, GLQ, JQC): +$246.28 (yield at 11.55%)

Inflow Common Stocks/Stock Funds =  $278.85 (Includes only GLQ in CEFs)

Realized Gain Common Stock: $43.5

I am not likely to sell a stock next week. 

Outflow Exchange Traded Bonds:  $500  (early redemptions of TANNI and TANNL at par value after BP acquired the issuer TravelCenters, see Item # 7 below)

I am reinvesting the proceeds received from TANNI and TANNL into exchange traded first mortgage bonds which I will discuss in my next post. 

2023 Outflow Common Stocks/Stock Funds: -32,449.94

The primary reason for the outflow is the risk free return available in FDIC insured CDs and treasury bills given my investment objectives and risk tolerance.  

++++

Putin and His Servile Orcs: 

Invasion. Occupation. Bombing. Flood. Russia’s war is Kherson’s nightmare. - The Washington Post When the Orcs murder Ukrainian civilians, destroy their homes and businesses, the Russians make no distinction between Ukrainians who speak Russian or just Ukrainian. 

Russian missile strike kills at least 11 in Ukrainian city of Kryvyi Rih-The Guardian The Orcs targeted an apartment building and a food warehouse. Kryvyi Rih is Zelensky's hometown. 

Russian unit was blasted by artillery while waiting 2 hours for their commander to give a motivational speech 

The WSJ published last week an article about a Russian soldier, Ruslan Anitin, who surrendered to a Ukrainian drone, providing more details about what happened than in previous reports. The Russian Soldier Who Surrendered to a Ukrainian Drone - WSJ 

Anitin had been drafted and given almost no training which is the norm in Russia. He was equipped only with an old Soviet era rifle. 

After being given 4 meals and six bottles of water, Anitin was instructed to move into a trench near a Ukrainian position in Bakhmut. 

His unit came under mortar fire as soon as they were in the trench. In addition to the mortar fire, the Russians came under attack by drones fitted with small bombs originally made for rocket-propelled grenade launchers. 

Within a few hours, most of the Russians were dead or so severely wounded they took their own lives. No effort was made by Russian commanders to assist their men trapped in the trenches. 

Anitin  noticed when arriving at the trench the bodies of Russian soldiers who had been left in the trench to rot. 

Prior to being ordered to the trench, Anitin was told that he would be shot if he left his position.  

Ukraine's counteroffensive is now underway. Here's what's happened so far | CNN The Ukrainians claim that of their initial objectives was to destroy as many units of recently drafted Russian soldiers as possible. Based on other news articles, it appears to me that Ukraine is probing Russian defenses along a 600 mile front to determine the best place for a breakthrough and encirclement and to keep the Russians guessing on where that point may be. Ukraine Maps: Tracking the Russian Invasion - The New York Times; Ukraine in maps: Tracking the war with Russia - BBC News  

+++++

Trump and His Anti-Democracy Party:   

Trump's Attorney General Bill Barr characterized the Trump Indictment as "very, very damning" even if only half of it is true. Bill Barr says Trump's indictment is 'very damning' if 'even half of it is true' | Fox News

Trump responded in his typical juvenile manner: 

I am being far too generous to Donald in describing his tweets as juvenile. 

Bill Barr rebuts Trump's claim about indictment: He is not a victim here - YouTube

Republicans claim that storing military secrets in a bathroom is just fine since the door can be locked. Republicans: Bathrooms Great for Storing Military Secrets

Fact check: Debunking Trump's blizzard of dishonesty about his federal indictment 

Trump Supporters’ Violent Rhetoric in His Defense Disturbs Experts - The New York Times The violent rhetoric is to be expected and his normal for many Trump supporters. Congressman Andy Biggs (R-AZ) stated that "we have now reached a war phrase" and demanded an "eye for an eye". Kari Lake (R-AZ), who like Trump has refused to concede that she lost an election, made it clear that republicans have a lot of guns.  

GOP Congressmen Clay Higgins All But Declares War After Trump Indictment; The Congressman Telling Trump Supporters to ‘Buckle Up’ - The Atlantic

My congressman, Andy Ogles (R-TN), filed articles of impeachment against Biden and Harris. GOP Rep. Ogles introduces impeachment articles against Biden, Harris The articles of impeachment reference a $5M bribe that Biden allegedly took when he was Vice President from the Ukrainian gas company Burisma. The Trump Justice Department investigated that allegation and found nothing sufficient to launch an investigation. 

The allegation is based on a tip from someone then deemed a "credible" informant who reported that he was told by an unnamed Ukrainian businessman that he paid the bribe to stop a Ukrainian investigation of  Burisma. The GOP ‘bribery’ allegations against Biden remain transparently thin - The Washington Post; A quick guide to Trump’s false claims about Ukraine and the Bidens - The Washington Post Audio reveals how Giuliani pressured Ukraine to investigate Biden - YouTube; ‘Of course I did’: Giuliani acknowledges asking Ukraine to investigate Biden - POLITICO 

Needless to say, this double or triple hearsay is sufficient for Donald and his cult members to refer to President Biden as the Don of the "Biden Crime Family". 

I suspect that the "credible" informant providing the FBI with information was the cringeworthy Rudy Giuliani who was at the time doing whatever he could to help Donald beat Bidin, including making several visits to Ukraine during 2020. And the source who allegedly made the claim to Giuliani, is now dead. Giuliani identified the "witness" as the wife of Burisma co-founder. "Suspicious circumstances": Giuliani now claims GOP witness behind Biden bribery allegation is dead | Salon.com; Giuliani Says Key Biden Informant Is Dead | The New Republic Giuliani claims that the "witness" died under mysterious circumstances many years ago, and consequently the republicans have not produced a scintilla of evidence supporting their claim that Biden took a $5M bribe when he was the V-P. 

Other republicans have filed articles of impeachment against Biden, Attorney General Garland, Secretary for Homeland Security Alejandro Mayorkas, FBI Director Wray and a U.S. Attorney for D.C.. Cosponsors - H.Res.406 - 118th Congress (2023-2024): Impeaching Christopher Asher Wray, Director of the Federal Bureau of Investigation, for facilitating the development of a Federal police force to intimidate, harass, and entrap American citizens that are deemed enemies of the Biden regime. 

One of the co-sponsors is Representative Anna Paulina Luna who represents Florida's 13th congressional district, which is competitive. I will be making a campaign contribution to whoever runs against her as a Democrat. I am not in favor of wingnuts having any political power, regardless of political ideology or political tribe membership.  

Ms. Luna also sponsored a censure resolution against representative Adam Schiff (D-CA) that would fine him up to $13M for performing his duties as a congressman. Speaker McCarthy allowed that resolution to be voted upon and it received 196 republican votes in the House. House rejects bid to censure Adam Schiff over Trump investigations - CBS News All republican representatives from Tennessee, all virulent Trumpsters including the 3 who now represent parts of Nashville due to the anti-democracy party's decision that Nashville voters would no longer be allowed to elect a Democrat, voted to advance the censure resolution. Office of the Clerk, U.S. House of Representatives - Vote Details  

Trump defenders unleash 'an embarrassing slurry of misdirection, illogic and non sequiturs':-Raw Story 

Trump’s indictment video features a litany of favorite falsehoods - The Washington Post

Analysis: Trump's main 2024 election goal is now to save himself 

Fact check: Trump's inaccurate comparison to Hillary Clinton's classified documents scandal;  Hillary Clinton email controversy - Wikipedia 

Trump Can’t Bluster His Way Through Court - The Atlantic

House Republicans Want to Sink Jack Smith’s Indictment—By Flooding the Zone With Sh-t Republicans will do just about anything to protect Trump from the consequences of his own actions. He is in their view a victim of a political plot rather than someone justifiably indicted based on evidence that would be admissible in a criminal trial. It is not possible to have a fact based discussion with them, and to make any effort to do so is a completely futile endeavor.  

Trump lashes out at Lincoln Project 'perverts' after new ad mocks his indictment - Raw Story Just another Trump juvenile remark, one among tens of thousands. 

Trump is pleased with his fundraising off the Indictment, having raised so far over $6M after being Indicted for several felonies. 

Trump announces raising over $6 million since federal indictment news

I did not know the X-Men were behind the Indictment until reading this latest informative Trump tweet. Informative in this context means simply that Trump has once again confirmed his mental state as equivalent to a seriously unhinged 7-10 year old brat - no older than 10. That observational opinion has nothing to do with his political affiliation or policy positions but just an opinion based on overwhelming and consistent evidence of who and what he is as a person.  

Republican primary: 2024 Polls | FiveThirtyEight Trump continues to have a substantial lead over DeSantis. (average of polls: 53.4% Trump vs. 21% DeSantis and 5.5% for Pence) Pence is unpopular among Trumpsters since he accepted the certified election results in 4 states won by Biden as required by law when Trumpsters believed, based on Donald's instructions, that the republican state legislatures in those states needed to decide who won. Fact check: No, Pence can't overturn the election results; Pence says Trump told him he was 'too honest' for refusing to overturn election results

+++++

1. Corporate Bonds: 

A. Bought 2 Oracle 3.4% SU Maturing on 7/8/24 at a Total Cost of  97.885: 

Issuer: Oracle Corp. (ORCL) 

ORCL Analyst Estimates | MarketWatch

ORCL SEC Filings 

SEC Filed Earnings Press Release for the F/Q Ending 5/31/23 (4th fiscal quarter; cash, cash equivalents and marketable securities at $10.187B; long term debt at $86.42B; revenues = $13.837B; GAAP net income = $3.319B; free cash flow = $8.47B; fiscal 2023 4 quarters free cash flow = $29.547B) 

Financing costs are going up. This excerpt from the last 10-Q filing lists the bonds sold during the first 9 months of fiscal 2023: 

Page 16, 10-Q for the Q/E 2/28/23 

For now, I am not willing to buy Oracle bonds maturing in 2025 or thereafter. I will occasionally monitor the price of the 5.8% SU maturing in 2025 and may possibly buy that one when the 2024 bonds that I now own are about to mature or have matured. The price would have to be below 100.  Bond Page | FINRA.org

New Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa2/BBB

YTM at Total Cost: 5.336%

Current yield at TC = 3.474%

I now own 4 bonds. 

On 6/6/23, the 1 year treasury bill and the 2 year treasury note closed at a 5.2% and 4.51% yields respectively. 

I participated in the 52 week T Bill auction held on 6/13/23.  

B. Bought 1 Black Hills 3.95% SU Maturing on 1/15/2026 at a Total Cost of 96.326: 

Issuer: Black Hills Corp. (BKH) -Utility Holding Company

BKH Analyst Estimates | MarketWatch

BKH SEC Filings 

BKH SEC Filed Earnings Press Release for the Q/E 3/31/23 

I previously eliminated my common stock position. Item # 2.H. Eliminated BKH in Fidelity Account - Sold 5+ at $70.55 (4/7/22 Post)(profit snapshot = $61.22) 

This bond has a higher yield, using the YTM number, than the common stock.  Black Hills Corporation (BKH) Dividend History | Seeking Alpha

Unlike the common stock, I know now what my total return will be when this bond matures and is paid off.  

The certainty of a total return number, barring a bankruptcy, causes me to favor a higher yielding senior unsecured bond over the common stock given my age and financial objectives, provided I am able to mitigate interest rate risk with a relatively short bond maturity. 

I will consider buying back the common stock when the dividend yield is higher than a BKH SU bond. 

New Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa2/BBB+

YTM at Total Cost: 5.484% 

Current Yield at TC: 4.1% 

I now own 5. 

C. Bought 2 Eversource Energy 4.2% SU Maturing on 6/27/24 at a Total Cost of 98.609: 

Issuer: Eversource Energy Stock (ES) - Utility Holding Company

ES Analyst Estimates | MarketWatch

ES SEC Filings 

SEC Filed Earnings Press Release for the Q/E 3/31/23 

I have eliminated my common stock position. 

This SU bond provides a higher yield using the YTM and a total return certainty.

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa1/BBB+

YTM at Total Cost: 5.591%

Current Yield at TC = 4.26%

I now own 6 bonds. 

Last Bond Offering (May 2023): Prospectus 

D. Bought 1 Wells Fargo 3.75% SU Maturing on 1/24/24 at a Total Cost of 98.972: 

Issuer:  Wells Fargo & Co. (WFC) 

WFC Analyst Estimates | MarketWatch

SEC Filed Earnings Press Release for the Q/E 3/31/23 

New Finra Page: Bond Page | FINRA.org

Credit Ratings: A1/BBB+

YTM at Total Cost: 5.468%

Current Yield at TC = 3.79%

E. Bought 1 Goldman Sachs 5.7% SU Maturing on 7/12/24: 

Issuer:  Goldman Sachs Group Inc. (GS) 

GS Analyst Estimates | MarketWatch

GS SEC Filings 

I replaced with this purchase a 3% GS SU that was bought on 5/5/22 and matured on 6/13/23. Both of those SU notes were purchased through Fidelity's Corporate Notes program and were bought at par value as original issues. 

2. Small Ball Buys: 

A. Added 10 JQC at $4.94: 

Quote: Nuveen Credit Strategies Income Fund Overview - CEF

Cost $49.4

Leveraged: Substantial 

This CEF mostly owns variable rate senior loans that are rated in junk territory. 

Investment Strategies: Monthly Income Generation/Diversification Among Asset Classes. 

Sponsor's website: JQC -Nuveen

SEC Filed Shareholder Semi-annual Report: Nuveen Credit Strategies Income Fund

Last Discussed: Item # 2.D.  Added 5 JQC at $4.99 (5/20/23 Post) 

Average cost per share: $5.13  (100 shares)

Dividend: Monthly at $.0475 per share ($.57 annually)

Nuveen Credit Strategies Income Fund (JQC) Dividend History | Seeking Alpha

ROC support. 

Yield at New AC = 11.11%

Last Ex Dividend: 6/14/23 (owned all as of)

Data Date of 6/9/23 Purchase: 

Closing Net Asset Value per share: $5.8

Closing Market Price: $4.94 

Discount: -14.83%

Average 3 Year Discount: -9.97%

Sourced: JQC - CEF Connect 

JQC-Morningstar: Currently rated 2 stars. 

B. Added 5 BTZ at $10.09

Quote: BlackRock Credit Allocation Income Trust (BTZ)

Cost: $50.45

Leveraged: Yes and substantial at 36.98% as of 3/31/23

BTZ SEC Filings 

BTZ SEC Filed Annual Report 

SEC Filing: Holdings as of 3/31/23 

Investment Strategies: Monthly Income Generation/Diversification in Bond Sector

Effective Duration: 5.73 years as of 5/31/23

Generally, the rule of thumb is that a bond fund's net assets will go up or down 1% with each 1 year in duration. 

Number of Holdings: 1,597 as of 5/31/23

Credit Ratings: 

Given the junk bond exposure, this fund is not described as an investment grade bond fund. While that classification allows for some junk bonds, a 45.57% weighting in junk rated bonds takes BTZ well outside the maximum limit.  

Sponsor's website: BTZ

Last Discussed: Item # 2.I. Added to BTZ - Bought 5 at $10.25 (5/27/23 Post) 

New Average cost per share: $10.26 (20 shares)

Dividend: Monthly at $.0839 ($1.01 annually, rounded up)

ROC Supported 

Yield at New AC: 9.84%, rounded down. 

Yield calculation assumes continuation of the same penny rate which may not happen, either due to a decrease or increase in the dividend amount. 

Last Ex Dividend: 6/14/23 (owned all as of) 

Data date of 6/9/23 Purchase: 

Closing Net Asset Value Per Share: $11.22

Closing Market Value per share: $10.13

Discount: -9.71%

3 Year Average Discount: -5.97%

Sourced: BTZ - CEF Connect 

BTZ-Morningstar: Currently rated 3 stars

C. Added to FSK - Bought 10 at $19.6: 

Quote: FS KKR Capital Corp. - Externally Managed BDC.

Cost: $196

Average cost per share: $19.65 (90+ shares)

Last Reported Net Asset Value per share: $24.89 (as of 3/31/23)

Dividend (regular only): Quarterly at $.64 per share ($2.56 annually)

Some special dividends have been paid in addition to the regular dividends. 

FS KKR Capital Corp (FSK) Dividend History | Seeking Alpha

Yield at $19.65 (regular dividend only) =  13.03%

Last Ex Dividend: 6/13/23 (owned all as of)  

I discussed FSK in my last post and have nothing further to add here. Item # 2.O. Added 2 FSK at 19.88 (6/10/23 Post) I discussed the last earnings report in that post. SEC Filing

D. Added to DCOM - Bought 5 at $18.50: 

Quote: Dime Community Bancshares Inc. (DCOM)

Cost: $92.5

DCOM  SEC Filings

Investment Category: Regional Bank Basket Strategy

New AC per share: $18.3 (35+ shares)

Dividend: Quarterly at $.25 per share 

Dime Community Bancshares, Inc. (DCOM) Dividend History | Seeking Alpha

Yield at New AC = 5.46%, rounded down. 

Last Ex Dividend: 4/14/23 (owned 23+ as of)

I discussed DCOM in my last post and have nothing further to add here.  Item # 2.E. Added 7 DCOM at $18.79 (6/10/23 Post). I discussed the 2023 first quarter earnings report in that post. SEC Filed Earnings Press Release

E. Restarted AVK - Bought 10 at $11.58: 

Quote: Advent Convertible & Income Fund Overview

Cost: $115.8

This CEF primarily owns convertible securities and junk bonds. 

Leveraged: Yes and substantial at 44.74% as of 6/9/23  

Last Discussion: Item # 3.O. Eliminated AVK - Sold 10 at $19.52 (6/4/21 Post)(profit snapshot = $64.34) 

I would attribute most of the price decline since I eliminated the position to the 2022 interest rate rise. The fund had a -34.27% total return in 2022 based on price and a -24.23% total return based on net asset value per share. When a closed end fund's net asset per  shares declines by that much during a year, there will generally be a substantial increase in the discount that produces an even larger total return decline. AVK's substantial leverage significantly added to its 2023 negative total return. 

2022 Total Return Two Unleveraged ETFs: 

SPDR® High Yield Bond ETF -12.2%

SPDR® Convertible Securities ETF -20.81%

AVK Investment Category: Monthly Income Generation

AVK SEC Filings 

Annual Report for the F/Y Ending 10/31/22 

SEC Filings-Holdings as of 1/31/23 

Dividend: Monthly at $.1172 ($1.41, rounded up)

ROC Supported

Yield at $11.58 = 12.15%

Last Ex Dividend: 6/14/23 (owned as of)

Sponsor's Website: Advent Convertible and Income Fund 

Data Date of 6/12/23 Purchase: 

Closing Net Asset Value per share: $12.51

Closing Market Price: $11.59

Discount: -7.35%

Average 3 Year Discount: -7.23%

Sourced: AVK-CEF Connect 

AVK-Morningstar (currently rated 2 stars)

F. Added to CTO - Bought 10 at $16.66: 

Quote:  CTO Realty Growth Inc. (CTO) - Externally Managed Equity REIT

CTO SEC Filings

2022 Annual Report 

Website: Home - CTO Realty Growth, Inc.

Last Stock Offering: Prospectus, 3.45M shares sold at a public offering price of $19.

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Last Discussed: Item # 3.B. Added to CTO - Bought 5 at $19.22 (1/20/23 Post) 

New AC per share: $18.71 (48+ shares)

Dividend: Quarterly at $.38 per share ($1.52 annually)

I am reinvesting the dividend. 

Yield at New AC = 8.12%

Last Ex Dividend: 6/7/23 (owned 38+ as of)

Last Acquisitions: CTO Realty Growth Announces Acquisition of 446,500 Square Foot Retail Power Center in Dallas, Texas for $61.2 Million (6/12/23); CTO Realty Growth Announces Acquisition of The Collection At Forsyth in Atlanta, Georgia for $96.0 Million (12/30/22)

Last Earnings Report (Q/E 3/31/23): SEC Filed Earnings Press Release and Supplemental 

Core FFO per share: $.39 

AFFO per share: $.43

Net Income to AFFO Reconciliation: 

Revenues: $24.717M

Leased: 93.5%

Occupied: 89.9%

Portfolio Summary: Square feet in thousands

CTO is also the external manager of the publicly traded REIT  Alpine Income Property Trust Inc. (PINE) which is a net lease REIT. In the 2023 first quarter, CTO received from PINT $1.098M in management fees. 

As of 3/31/23, CTO owned 14.8% of PINE's equity, then valued at $39.3M.  10-Q for the Q/E 3/31/23 at p. 9. CTO received $337K in dividends in the first quarter. 

CTO also makes commercial real loans: 

Page 13, 10-Q

2023 Guidance: AFFO per share between $1.64 to $1.69

Long Term Debt as of 3/31/23: $465.13M

G. Added 5 GLQ at $6.13:

Quote: Clough Global Equity Fund Overview - Leveraged Stock CEF

Cost = $30.63

Website: Clough Global - GLQ

GLQ SEC Filings

SEC Filing: Holdings as of 1/31/23

SEC Filed Annual Report for the F/Y Ending 10/31/22

Top 10 Positions as of 4/30/23: 

New Average cost per share: $7.89

Dividend: Monthly at $.0599 ($.72 annually, rounded up)

I am reinvesting the dividend. 

Heavy Recent ROC Support. 

Yield at New AC = 9.13%, rounded up. 

Last Ex Dividend: 6/15/23  (owned all as of)

Data Date of 6/13/23 Purchase: 

Closing Net Asset value per share: $7.34

Closing Market Price: $6.21

Discount: -15.4%

Last Discussed: Item # 3.E, Added 5 GLQ at $5.96  (5/6/23 Post) I have nothing further to add to that discussion.  

H.  Added to SLRC at $14.39: 

Quote: SLR Investment - Externally Managed BDC

SLRC SEC Filings

2022 Annual Report (risk summary starts at page 24 and ends at page 55; summary of investments starts at page 92; SLRC debt discussed starting at page 112; five year financial data at page 113)

Last Discussed: Item # 2.E. Eliminated SLRC in Two Taxable Accounts - Sold  37+ at $15.79 and 30 at $15.79 (3/11/23 Post)(profit snapshots = $66.68) I discussed the 2022 4th quarter report in that post. SEC Filed Earnings Press Release

Last Buy Discussion: Item #4.H. Added to SLRC in Fidelity Taxable Account - Bought 1  $13.38; 4 at $12.53; 3 at $12.34 (10/11/22 Post)

New Average cost per share:  $15.26 (145+ shares)

Dividend (regular only): Monthly at $.136667 per share ($1.64 annually)

I am currently reinvesting the dividend

Yield at New AC = 10.75%

Last Ex Dividend: 6/16/23 (owned all as of)

Net Asset Value per share history: 

 3/31/23:  $18.04

12/31/22: $18.33  

6/30/22:  $18.53

12/31/21:  $19.93

12/31/20: $20.16

9/30/20:  $20.14   10-Q

12/31/19:  $21.44

12/31/18:  $21.75 

12/31/17:  $21.81

12/31/16:  $21.74

12/31/15:  $20.79 

12/31/14:  $22.05

12/31/13:  $22.50

12/31/12:  $22.70

12/31/11:   $22.02

Initial Public Offering: Prospectus February 2010, priced to the public at $18.5 and at $17.205 to the underwriters 

Last Earnings Report (Q/E 3/31/23): SEC Filed Press Release 

Net Investment Income: $22.1M

NII per share: $.41

Investment Portfolio Summary: 

10-Q for the Q/E 3/31/23(summary of investments starts at page 7; debt discussed starting at page 27)

SLRC Realized Gains to Date: $166.75

Goal: Any total return before ROC adjustments to the tax cost basis in excess of the dividend payments.  

I. Added 5 to QYLD at $17.8-Schwab Account: 

Quote: Global X NASDAQ-100 Covered Call ETF Overview

Sponsor's website: Nasdaq 100 Covered Call ETF- Buy-Write ETF

Expense Ratio: .6%

Last Discussed: Item # 4.D. Added 3 QYLD at $15.72 (1/16/23 Post) 

New Average cost per share: $18.19 (58+ shares)

Dividend: Monthly at a variable rate.

I am reinvesting the dividend. 

8+ shares have been bought with dividends so far. 

Last 12 Monthly Payments per share: $2.04, rounded up. 

Yield using $18.19 cost per share and $2.04:  11.215%

Next Ex Dividend: 6/20/23

Global X NASDAQ 100 Covered Call ETF (QYLD)-Morningstar (currently rated 3 stars)

Goal: Any total return in excess of the dividends paid prior to any ROC adjustment to the tax cost basis (avoids double counting).  

J. Added 10 ICMB at $3.9; 10 at $3.79: 

Quote: Investcorp Credit Management BDC Inc. Overview

I am attempting to dig myself out of a hole which, when I say that, I have to mention the first law of holes. When in one, quit digging.    

Management: External 

ICMB SEC Filings

Annual Report for the F/Y Ending 6/30/22

Website: Investcorp Credit Management BDC, Inc.

New Average cost per share: $4.69 (140+ shares) 

Dividend: Quarterly at $.13 per share ($.52 annually)

Some special dividends have been paid. 

Investcorp Credit Management BDC, Inc. (ICMB) Dividend History | Seeking Alpha

Yield at $4.69 =  11.09% (regular dividend only)

Last Ex Dividend: 6/15/23 (owned all as of)

The last dividend included a $.05 per share special dividend. 

I discussed ICMB in my last post and have nothing further to add here. Item # 2.K (6/10/23 Post) I discussed the 2023 first quarter report in that post. Investcorp Credit Management BDC, Inc. Announces Financial Results for the Quarter Ended March 31, 2023, and Quarterly and Supplemental Distributions

Investment Category: Lottery Ticket Basket, based on poor dividend history and net asset value per share destruction. 

K. Added 5 DEA at $14.54: 

Quote: Easterly Government Properties Inc. (DEA) 

Cost: $72.7

Properties | Easterly Government Properties, Inc.

DEA SEC Filings

DEA 2022 SEC Filed Annual Report 

10-Q for the Q/E 3/31/23 (list of properties starts at page 22; debt discussed starting at page 29, a combination of bank credit facility borrowings, senior notes and mortgages with senior notes maturing in the 2027-2034 time frame) 

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

While DEA is an Office REIT, it leases to the U.S. government, generally 1 building to a particular government agency. 

I would attribute some of the recent stock price decline to weakness in the private business office property sector which is not that relevant to DEA. 

Other reasons for the share price decline include increased borrowing costs, the attractiveness of risk free yields, and management's failure to meaningfully increase Cash Available for Distribution ("CAD") per share while growing the property portfolio.   

I am trying to dig myself out of a hole.  

New Average cost per share: $17.41 (134+ shares)

Dividend: Quarterly at $.265 per share ($1.06 annually), last raised from $.26 effective for 2021 first quarter. The $.26 rate was a 1 cent raise for the 2017 first quarter. When looking at this dividend history, the most likely culprit, without looking it up, will generally be slow CAD per share growth which is the relevant metric rather than just CAD.  

Easterly Government Properties, Inc. (DEA) Dividend History | Seeking Alpha

Yield at New AC = 6.09%

Yield at $14.54: 7.29%

Last Ex Dividend: 5/10/23

Last Discussed: Item # 2.D. Added 5 DEA at $13.65 (1/3/23 Post) 

Last Financial Report (Q/E 3/31/23): 

SEC Filed Press Release 

Core FFO Per Share: $.29

CAD per share: $.236 ($24.453M)

CAD per share in 2018 1st Quarter: $.221 ($11.9M)

Net Income to CAD Reconciliation: For an office REIT, the largest deduction from FFO to arrive at a CAD number will be maintenance expenses. 

Rental Revenue:  $68.148M 

Wholly owned and owned through a JV 86 properties with 8.6M square feet. 85 properties were leased primarily to U.S. government agencies. 

98% leased 

Since maintenance expense can fluctuate widely from quarter to quarter, it is better to look at annual CAD per share numbers. 

CAD per share: 

2016  $.89.    ($39.8M)

2018  $.95     ($48M)

2022 $1.06   ($108M)

Percentage Increase CAD 2016-2022: 171.36%

Percentage Increase in CAD per share 2016-2022:  19.1%

DEA Realized Gains to Date: $561.24

The largest gain was $272.36. Item # 1.A. Sold 21+ DEA at $28.81 (6/6/20 Post)(clearly overvalued at that price IMO)  

L. Added to CLPR - Bought 10 at $5.4: 

Quote: Clipper Realty, Inc. (primarily a NYC apartment REIT)

CLPR SEC Filings

2022 Annual Report

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Management: Internal

New Average cost per share: $6.24 (125+ shares)

Dividend: Quarterly at $.095 per share ($.38 annually) 

Clipper Realty Inc. (CLPR) Dividend History | Seeking Alpha

Yield at New AC: 6.09%

Last Ex Dividend: 5/12/23 (owned 103 shares as of)

Item # 2.H. Bought 10 CLPR at $5.04 (5/27/23 Post) I discussed Clipper's last earnings report in that post and have nothing further to add. SEC Filed Financial Report for the Q/E 3/31/23  

M. Added 3 PFLT at $10.74- Schwab Taxable Account: 

Quote:  PennantPark Floating Rate Capital Ltd. (PFLT)-Externally Managed BDC

Cost: $32.22

"Our debt portfolio consisted of 100% variable-rate investments. As of March 31, 2023, we had four portfolio companies on non-accrual, representing 2.0% and zero percent of our overall portfolio on a cost and fair value basis, respectively. As of March 31, 2023, the portfolio had net unrealized depreciation of $34.1 million. Our overall portfolio consisted of 130 companies with an average investment size of $9.0 million and a weighted average yield on debt investments of 11.8%."

PFLT SEC Filings 

Earlier this year, I eliminated a duplicate PFLT position. Item # 2.D. Eliminated PFLT in Fidelity Account - Sold 15 at $10.93 (3/11/23 Post)(profit snapshot = $74.78) 

Last Buy Discussions: Item # 2.H. Added to PFLT in Schwab Account - Bought 10 at $10.95 (1/3/23 Post); Item # 1.G. Bought 10 PFLT at $6.06; 4 at $5.75 (6/6/20 Post)

New Average cost per share: $9.35

Dividend: Monthly at $.1025 ($1.23 annually), raised from $.10 effective for the 6/14/23 ex dividend. 

PFLT Dividend History | Nasdaq

Last Ex Dividend: 6/14/23

Yield at $9.35: 13.16%, rounded up. 

Event Subsequent to the Quarter: "On April 18, 2023, Dominion Voting Systems (“Dominion”) and Fox News Network (“Fox News”) agreed to settle the defamation lawsuit filed by Dominion against Fox News. As part of the settlement Fox News agreed to pay Dominion $787.5 million. Dominion is a portfolio company of PFLT, which holds a minority equity interest in the company. While Dominion may retain some of the settlement proceeds for corporate purposes, the company communicated its intention to distribute a substantial portion of the proceeds, net of estimated taxes and expenses, to its equity holders and PFLT’s portion is estimated to be approximately $4.0 million. The timing and amount of any distribution is uncertain and subject to change."

Net asset value per share history:

12/31/22:  $11.30

9/30/22:   $11.62

12/31/21:  $12.70

3/31/21:    $12.71 Press Release 2021 1st Q Earnings 
3/31/20:   $12.20   10-Q at page 5 
12/31/19:  $12.95
9/30/19:   $12.97
6/30/19:   $13.07 
3/21/19:    $13.24
12/31/18    $13.66
9/30/18    $13.82
6/30/18:   $13.82
9/30/17:   $14.10
9/30/16:   $14.06
9/30/15:   $13.95
9/30/14:   $14.40
9/30/13:   $14.10
9/30/12:   $13.98

Last Earnings Report (Q/E 3/31/23): This is the second fiscal quarter. The F/Y ends on 9/30/23. 

SEC Filed Financial Report 

Net Investment Income: $16.7M

NII per share: $.35

Core NII per share: $.34 

GAAP Net Asset value per share: $11.15

Company Assessment of Impact on NII per share based on changes in interest rates: 

10-Q at page 54

SEC Filing - Summary of Investments as of 3/31/23

PFLT Realized Gains to Date: $210.05

Other Sell Discussions: Item # 7.E. Sold Highest Cost 20 PFLT Shares Purchased with Dividends at $14.07 - Schwab Taxable Account (4/28/22 Post)(profit snapshot = $46.13); Item # 3. Sold 102 PFLT in Schwab Taxable Account at $13.26 -Highest Cost Lots (7/30/21 Post)(profit snapshot = $30.92); Item # 2.A. Eliminated PFLT in Fidelity Account-Sold 81+ at $12.01 (12/14/19 Post)($29.66) If I still owned the shares sold at the highlighted prices, I would probably be unable to achieve my goal for BDC stocks, which is to realize any gain on the shares, prior to any ROC adjustments to the tax cost basis, plus the dividends.  

Goal: Any total return in excess of the dividends paid prior to any ROC adjustment to the tax cost basis.   

3. Small Ball Sell: 

A. Sold 17+ OHI at $31.06: 

Quote: Omega Healthcare Investors Inc. (OHI) - Nursing Home and Senior Living REIT

Proceeds: $535.86

OHI SEC Filings

Portfolio-Omega Healthcare Investors, Inc. 

Investment Strategy: Equity REIT Common and Preferred Stock Basket Strategy

Profit Snapshot: Net of +$43.55 (2 fractional shares purchased with dividends were sold at a loss) 

Last Buy Discussion: Item # 4.C. Added to OHI - Bought 1 at $28.08 (1/23/23 Post) 

Dividend: Quarterly at $.67 per share ($2.68 annually)

The dividend was not supported by CAD per share, see below. 

Dividends – Omega Healthcare Investors, Inc.

Last Ex Dividend: 4/28/23

Last Earnings Report (Q/E 3/31/23): SEC Filed Press Release 

FFO = $146M

FFO per share: $.60

AFFO per share: $.66, down from $.74 in the 2022 first quarter

Cash Available for Distribution per share: $.60, below the quarterly dividend rate and down from $.65 

Current Operator Issues: 

 

The pandemic created more than the normal number of problems. 

OHI Realized Gains to Date = +$1,575.81

Some Sell Discussions: Item # 4.I. Eliminated OHI in Schwab Account - Sold 3 at $31.17 (11/22/22 Post); Item # 3.J. Pared OHI in Fidelity Taxable Account - Sold Highest Cost 6 Shares at $33.11 (8/16/22 Post); Item # 3.C. Eliminated OHI-Sold 26 at $31.44 (6/25/21 Post)(profit snapshot = $115.71); Item # 1.C. Sold 31 OHI at $30.13 (6/7/18 Post)(profit snapshot = $41.01); Item # 6 Sold 100 OHI at $37.38 - Update For Equity REIT Basket Strategy As Of 8/27/16 - South Gent | Seeking Alpha (profit snapshot = $117.60); Item # 6 Sold 39 Shares at $32.56  (10/5/17 Post)(profit snapshot $63.64); Item #5.A. Sold 107 OHI at $34.55 (7/15/17 Post)(profit snapshot = $211.51); Item 2.A. Sold 52+ OHI at $33.6-Eliminated Position in Roth IRA account  (5/8/17 Post)(profit snapshot = $66.63) 

Largest Gain = $887.91,  101+ share in 2016 (IB account)

This sale was not discussed since I did not publish blogs between September -December 2016. I did mention this transaction in a comment published on 9/7/16. Seeking Alpha

Other Gains over $100: 

OHI is one of the stocks that I will trade where I have zero confidence in achieving a satisfactory total return for a long term hold. I view the stock as high risk given the frequently precarious financial positions of several operators.   

I am satisfied with the total return realized by relatively short term trading. 

My consider to sell range has been generally between $31 to $35 with a consider to buy range is below $30. Given the number of operator problems, the next entry point will need to be below $28. 

4. Treasury Bills Purchased at Auctions: $10,000 in principal amount. 

3 of the 4 purchases described below were made in my Schwab account where cash balances earn only .4%. 

The 1 year T Bill was purchased in my Fidelity account where the MM sweep account (SPAXX) yields 4.74%. 

June 2023 Treasury Yield Curve: The 4 month bill continues to hold the highest yield. Those bills are auctioned on Wednesday. 

A. Bought 3 Treasury Bills at the 6/12/23 Auction:

Matures on 9/14/23

91 Day Bill 

Interest: $39.05

Investment Rate: 5.305%

B. Bought 2 Treasury Bills at the 6/12/13 Auction: 

Matures on 12/14/23

182 Day Bill 

Interest = $52.12

Investment Rate = 5.381%

C. Bought 2 Treasury Bills at the 6/13/23 Auction: 

Matures on 6/13/24

1 Year T Bill 

Interest: $99.7 (by holding to maturity, this interest will be taxable in 2024)  

Investment Rate: 5.208%

D. Bought 3 Treasury Bills at the 6/14/23 Auction: 

Matures on 10/17/23

117 Day Bill 

Interest = $51.07

Investment Rate:  5.327%

5. CDs - FDIC Insured: $6,000

A. Bought 1 Umpqua Bank 5.5% CD Maturing on 10/18/23: 

Interest paid at maturity. 

B. Bought 1 Enterprise Bank and Trust 5.3% CD Maturing on 6/18/24: 

Interest paid monthly. 

Operating bank for the bank holding company Enterprise Financial Services Corp. (EFSC) 

C. Bought 2 Enterprise Bank and Trust 5.35% CDs Maturing on 12/20/23: 

Interest paid monthly. 

D. Bought 2 Cambridge Savings Bank 5.2% CDs Maturing on 7/19/23: 

Just redirecting in my Schwab account proceeds from a maturing T Bill that would otherwise earn .4% in Schwab's sweep account. 

6. Cash Flow into Fidelity Account 6/15/23: 

Corporate Bond Redemption/Maturity: $4,000

Corporate Bond Interest: $726.63

CD Interest: $48.37  

Common Stocks Dividends: $102.85

CEF Dividends: $4.84 

Equity Preferred Stock Dividends: $13.72

The only first mortgage bond in this grouping is the Southwestern Public Service 3.3% FM maturing on 6/15/24. Bond Page | FINRA.org

7. Early Redemptions of Exchange Traded Baby Bonds TANNI and TANNL:

Coupons: 8% for TANNL maturing in 2029 and 8.25% for TANNI maturing in 2028 both paid on $25 par values.  

Investment Category: Exchange Traded Baby Bonds

Profit Snapshots: 

TANNI and TANNL were $25 par value SU bonds issued by Travelcenters that was recently acquired by BP. 

As previously noted, I expected BP to call these bonds at their $25 par values once it consummated the acquisition. 

The snapshots referred to these bonds as "preferred" issues which is incorrect. 

For these bonds, the goal was to exit the position at any profit + the interest payments.   

TANNI, TANNL (TANO), TANNZ Total Realized GAINs: $384.25

Prior Sell Discussions: TANNL previously traded under the symbol TANO. TANNZ was a 8% SU that would have matured in 2030 but was also called effective on 6/15/23.   

Item # 2.A. Eliminated TANNL-Sold 30 at $25.36 (2/20/19 Post)(profit snapshot = $36.35); Item # 1 Sold 30 TANNZ at $24.37 (10/19/2017 Post)(profit snapshot= $211.47); Item # 4.B. Sold Remaining TANNL at $25.46 (4/14/17 Post)(profit $11.57);  Item # 5 Sold 50 TANO in RI Account at - Update For Exchange Traded Bond And Preferred Stock Basket Strategy As Of 3/28/16 - South Gent | Seeking Alpha (profit snapshot=+$55.47); Item # 4.A. Sold 50 TANNL at $25.53 (3/1/17 Post)(profit snapshot = $67.78) 

While the TravelCenter SU bonds were unrated, I always considered them to be junk. As I have become older, I have become even less willing to risk capital in junk bonds which explains the downsizing from 30 or 50 share purchases in the TravelCenter bonds to 5 and 10 share lots. 

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.