CAG, CMCSA, EPRT, GBDC, GMRE, KHC, NNN, O, OFS, PNFPP, PWFPRT:CA, SAR, SAZ, WPC

Economy: 

Fed minutes: Fed officials see inflation 'upside risks'; Meeting Minutes July 25-26 The release of these minutes last Thursday took the 10 year treasury yield to a 15 year high which sounds scarier than it is given the FED's rate manipulation policies starting in 2008. The current yield is just a return to a more normal 2% real yield + 2%-2.5% annual average inflation over the next ten years.  

July retail sales, seasonally adjusted, rose .7% from the previous month, better than the .4% consensus estimate. Retail sales rose 3.2% above July 2022. May and June retail sales were revised up. These numbers are not adjusted for price changes/inflation. Monthly Retail Trade - Sales Report

Retail sales report July 2023:

Regional banks slide after Fed's Kashkari advocates 'significantly further' capital regulation (8/15/23)

Homebuilder sentiment drops sharply, as mortgage rates rise- CNBC, see  Builder Confidence Falls on Rising Mortgage Rates - NAHB

China economy: new loans fall, property fears, low consumer sentiment

Treasury Yield Curve: 

TIPs: Real Yields 

TIPs use the CPI price index. 

10 year TIP Breakeven Inflation Rates: 

8/1/23: 2.37 %

8/18/23: 2.32 %

5 Year TIP Breakeven Inflation Rates: 

8/1/23: 2.26%

8/18/23: 2.22%

CME FedWatch Tool - CME Group (89% probability that the FED will leave the FF range unchanged after its 9/20/23 meeting)

Atlanta FED GDP Model: Estimated annualized real GDP growth in the third quarter tracking at 5.8% as of  8/16. GDPNow- Federal Reserve Bank of Atlanta

Sticky-Price CPI- Federal Reserve Bank of Atlanta: annualized at 3.1% in July and at 5.5% Y-O-Y. This inflation estimate is still in problematic territory. 

+++

Allocation Shifts Discussed in this Post: 

Treasury Bills Purchased at Auction: $5,000 in principal amount

Corporate Bonds: $5,000 in principal amount

Canadian Reset Equity Preferred: +C$1,865 (100 PWF.PRT:CA) 

U.S. Equity Preferred: +$330.25 (yield at 7.66%)

SU Exchange Traded Baby Bond: $124.5 (yield at 8.53%) 

Common Stocks: -$407.84

(consisting of $1,996.31 in proceeds minus $1,588.47 in purchases)

Weighted Yield of Stock Purchases: 6.14%

Realized Gains: +$349.67

2023 Net Outflow Common Stocks/Stock Funds: -$37,071.21

+++

Canadian Reset Equity Preferred Stocks:  

I own several Canadian reset equity preferred stocks. These preferred stocks were bought on the Toronto exchange using my CAD stash held in my Interactive Brokers account. 

Depending on the stock, these securities reset every 3 months at spreads to the 3 month Canadian Government Treasury Bill or every five years at spreads to the 5 year Canadian Government Bond. 

Canada 5 Year Government Bond Overview | MarketWatch

Canada 3-Month Bond Yield - Investing.com

I had lost track of what I owned and, more importantly, when each Canadian preferred stock resets its coupon. 

I had no idea that EMAPRC had just reset its coupon for 5 years until I decided to create a document summarizing what I owned and the reset terms. 

EMAPRC reset its coupon for five years at 6.434%, representing a 2.65% spread to the 5 year Canadian Government bond yield as of 7/17/23. Emera Incorporated Announces Dividend Rates for Series C and Series D First Preferred Shares | Emera; Item # 1.A. Bought Back 100 EMAPRC at C$18.45 (10/18/22 Post) The new EMAPRC dividend yield at C$18.45 is 8.72% (.06434% x. C$25 par value = C$1.6085 per share annual dividend ÷ C$18.45 = 8.72%).  

The preferred stocks that reset every 3 months have performed better than the 5 year resets over the past several months. 

Current Positions: 

The Canadian 5 year bond yields used for the reset will generally be the ones 30 days prior to first day of the subsequent period. 

I did not check all of them when preparing this list but did review 3 prospectuses for preferred stocks that reset for 5 years in 2024. 

Those were for ENB.PRP, PPL.PRC, and PWF.PRT which is the first one to reset in 2024.   

IMO, the preferred stocks that reset quarterly at spreads to the 3 month Canadian T Bill have stock prices that are inconsistent with the current rates, or higher, being the new normal for an extended period.   

ALAPRA (50 Shares) 2.66% Spread to the 5 Year Canadian Government bond in September 2025

CVEPRC (100 Shares) 3.125% spread to the 5 year Canadian Government bond in December 2024 

(CVEPRC was originally issued by Husky Energy using the symbol HSPRC. Husky was acquired by CVE which resulted in a symbol change)

EMAPRC (100 Shares) 2.65% spread to the 5 Year Canadian Government that reset at 6.434% for five years effective this month. 

ENBPRP (500 Shares): 2.5% spread to the 5 year Canadian government bond, resets 3/1/2024, but the 5 year Canadian bond yield used in the calculation will be the one on the 30th day prior to the first day of the next 5 year period. 

FFHPRD (100 Shares) 3.15% spread to the 3 month Canadian Treasury Bill yield, resets every 3 months. For the 2023 third quarter, the dividend was will be C$.48074. Fairfax Announces Quarterly Dividend on Series C, D, E, F, G, H, I, J, K and M Preferred Shares and Quarterly Dividend Rate for Series D, F, H and J Preferred Shares - Fairfax Financial The 2022 third quarter dividend was C$.29157. FFH-PD.TO Stock Price Annualizing the C$.48074 third quarter dividend to C$1.92, the yield at yesterday's closing price of C$19.5 was 9.85%. Rated at BB+ by Fitch. Fitch Assigns Ratings to Fairfax Financial Holdings Limited

 

FFHPRF (100 Shares) 2.16% spread to the 3 month Canadian Treasury Bill yield, resets every 3 months. 

FTSPRM (200 Shares) 2.48% spread to the 5 year Canadian Government Bond, resets in December 2024.  

MFCPRM (100 Shares) 2.36% Spread to the 5 year Canadian Government Bond in 12/2024 

PPLPRC (400 Shares) 2.6% spread to the 5 year Canadian Government bond yield, resets 3/1/24 (the 5 year bond yield is determined as of the 30th day prior to the first day of each subsequent 5 year period)

PWFPRT (200 Shares) 2.37% spread to the 5 year Canadian Government bond yield, next reset 1/31/24 using the 5 year yield as of the 30th day prior to the first day of each subsequent five year period. This one has two more quarterly payments at the current coupon rate.  

TAPRH (100 Shares): Item # 1 Bought 50 TAPRH at C$16.85 and 50 at C$16.19 (7/17/2019 Post) This one reset for 5 years in September 2022 at a 3.65% spread to the 5 year Canadian bond yield, producing a coupon of 6.894%. 

TRPPRD (250 Shares) 2.35% spread to the 5 year Canadian government bond on 4/1/2024, using the 5 year yield as of the 30 day prior. TC Energy- Stock Information

TRPPRE (250 Shares) 2.35% spread to the 5 year Canadian Government bond yield, next reset in October 2024. 

TRPPRH (200 Shares) 1.28% spread to the 3 month Canadian Treasury bill, resets quarterly. The low spread has been restraining upward price movement even as the 3 month yield has risen significantly. The last quarterly dividend for the period to but excluding 9/29/23 was C$.364187 per share. TC Energy declares quarterly dividends At last Friday's closing price of C$12.96, and annualizing the last quarter rate of C$.364 to C$1.456, rounded down, the yield was 11.23%. The price and yield are inconsistent with the current 3 month bill, or higher, being the new normal. 

Realized Gains in Canadian Reset Preferred Stocks (excluding a US$351.53 profit realized on a Canadian reset priced in USDs) = +C$16,951

Snapshots are included in my Advantages and Disadvantages of Equity Preferred Floating Rate Securities 

I try to address interest rate risk issues by combining the 3 month and 5 year resets; adding to the 5 year preferred stocks when it is more probable than not that the coupon will reset within 1 year at a higher and more attractive rate then the current coupon; selling at a profit when it is more probable than not that the reset will be at an unfavorable rate; and trading several of them to lock in capital gains. 

++++

Putin and His Violent, Orwellian State: 

Last weekend, the Orcs murdered several children including a 23 day old infant by shelling Kherson, Baby and family among seven killed in Russian shelling - BBC News The Orcs also murdered a Christian pastor. Just a bunch of out-of-control murderous psychopaths.  

Russia’s new history textbooks teach Putin’s alternate reality - The Washington Post    

Three killed after blasts in Lutsk and Lviv - BBC News Russia targeted a factory owned by the Swedish company SKF. The Orcs targeted civilian buildings in Lviv injuring 4 people. 

Poland foils Russia's plans to sabotage weapons flow to Ukraine - The Washington Post The Russian plans included murders and arson committed in Poland.  

Elena Kostyuchenko: German authorities launch investigation after Russian dissident journalist falls ill on train to Berlin She had been warned that the Orcs planned to murder her in Germany. 

Another Mysterious Moscow Death: Russian General Dismissed Over Performance in Ukraine War Dies of ‘Illness'

Ukraine Will Fail With Key Counteroffensive Goal, Says US Intel: WP Report I interpreted the WP article as meaning that Ukraine will be unlikely to cut of the land bridge to Crimea this year. If that assessment proves correct, then Ukraine will need to find a way to continue the offensive into the 2023-2024 winter, making the lives of Russian troops stationed in Ukraine as miserable as possible which would include non-stop attacks on bridges to disrupt fresh supplies. Otherwise, Russia will be able to resupply, deploy fresh troops and improve on its already impressive multiple defense lines. 

++++

Trump and His Trumpsters: 

The latest indictment increased Trump's lead over his republican challengers: RealClearPolitics - Election 2024 - 2024 Republican Presidential Nomination 

Donald and Biden are in a dead heat in 2024: RealClearPolitics - Election 2024 - General Election: Trump vs. Biden

Donald Trump indicted in Georgia 2020 election subversion probe 

READ: PDF of 98-page unsealed Trump indictment in Fulton County, Georgia, probe | CNN Politics Of the 18 indicted co-conspirators, I only recognized the names of Mark Meadows and the following lawyers: Rudy Giuliani, Sidney Powell, John Eastman, Jeffrey Clark, Jenna Lynn Ellis and Kenneth Chesebro. Key Players Being Charged in Trump’s Georgia Indictment - The New York Times  

Exclusive: Georgia prosecutors have messages showing Trump's team is behind voting system breach   

Purported names, photos and addresses of Fulton County grand jurors circulate on far-right internet Trumpster threats, harassment, and potential acts of violence can reasonably be expected now and are already occurring. Fulton County Sheriff's Office investigating threats to grand jurors who voted on Trump indictment - CBS News This kind of action is also aimed at intimidating potential trial jurors into acquitting Donald.   

Rudy Giuliani made desperate appeal to Trump to pay his legal bills in Mar-a-Lago meeting Trump has a long history of reneging on his obligations. Trump still owes money to contractors who built Taj Mahal casino (1/24/20 USA Today); USA TODAY exclusive: Hundreds allege Donald Trump doesn’t pay his bills After year of trying, I am not able to find a single positive personality attribute in Donald's character. 

Jack Smith, the special prosecutor, has acquired through subpoena Trump's direct messages sent and received in his Twitter account, including draft messages and deleted ones.Special Counsel Used Warrant to Get Trump’s Twitter Direct Messages - The New York Times In an effort to protect Trump, Elon Musk caused Twitter to resist turning over those messages. Twitter was ordered to comply by a federal judge and was found in contempt of court. I suspect those messages will be a gold mine for Smith in his criminal cases against Donald and others. Donald is one loose cannon. 

Trump’s Social Media Posts Test Conditions of His Release in Jan. 6 Case - The New York Times Trump's reptilian brain can not resist spewing venom. 

How Trump Benefits From an Indictment Effect - The New York Times Republicans believe that charges against Trump are politically motivated, an opinion reached without stepping back and looking at the facts objectively. Their response is purely Pavlovian, conditioned by accepting Trump's demonstrably false statements and narratives as true irrespective of the facts which are routinely characterized by republicans now as "Fake News". 

How Trump Uses Supporters’ Donations to Pay His Legal Bills - The New York Times

Kenneth Chesebro, alleged architect of fake electors' plot, followed Alex Jones around Capitol grounds on January 6th 

As Georgia Republicans rebuke Trump, they are lonely voices in GOP - The Washington Post

The phone calls from Trump's team at the core of the Georgia indictment - The Washington Post As Trump once said, you can not believe what you hear and see. President Trump Goes Full Orwell with Don't Believe Your Eyes and Ears Bit Republicans have gone full Orwellian with exceptions like Senator Romney and Liz Cheney.   

Republicans Are Mad They Got The Hunter Biden Special Counsel They Asked For Hunter will be convicted after a trial. The only question is whether he will receive a harsher sentence from the court than what was offered in the now abandoned plea agreement. 

Tasers, taunts, torment: What we know about the hours of horror 2 Black men suffered at the hands of a self-described 'Goon Squad' - 6 White "police" officers in Mississippi 

Fox's Greg Gutfeld goes on sexist rant, suggests crimes would 'disappear' if women went away

Texas Rep. Ronny Jackson (R) berates, threatens officers in rodeo altercation while detained, video shows - The Washington Post Jackson is a 100% pure Trumpster. 

Trump campaign ad makes false and misleading claims against Atlanta DA - The Washington Post

++++

Portfolio Management: 

Goals in Order of priority: (1) Capital Preservation; (2) increase annual dividend and interest income; and (3) capital gains generally targeted at a $25K annual rate. The second and third goals require some risk to the primary capital preservation goal which I attempt to mitigate in various ways. 

The goal for 2024 is to double my interest/dividend income compared to 2023.  

The process for achieving that goal involves: 

(1) Selling non-dividend and low dividend yielding stocks and stock funds; 

(2) Using some proceeds from stock sales to buy each week stocks with a weighted average yield above 5%; 

(3) Placing more emphasis on generating income through preferred stock purchases with greater than 7% yields; 

(4) Redeploying proceeds from  treasury notes and treasury bills into higher yielding treasury bills, taking advantage of the inverted yield;  

(5) Redeploying most proceeds received from maturing corporate bonds into higher yielding ones;

(6) Aggressively managing my low yield Schwab sweep account to keep balances low; and 

(6) Keeping balances high in the Vanguard Cash Reserves Federal Money Market Fund Admiral Shares (VMRXX) 

+++

1. Added 100 PWF.PRT:CA at C$18.65: 

Quote: PWF-PT.TO 

Issuer: Power Financial, a wholly owned subsidiary of Power Corp. of Canada (POW:CA). I still own 100 shares of POW:CA. Item # 1. Bought 100 POW:CA at C$21.37 (5/30/20 Post)

Power Financial in turn owns stakes in 3 publicly traded companies: 

Great-West Lifeco Inc. (Canada: Toronto); IGM Financial Inc. (Canada: Toronto) and Groupe Bruxelles Lambert S.A. (Belgium: Euronext Brussels)

August 10, 2023 - Power Corporation Reports Second Quarter 2023 Financial Results 

Prospectuses for the Power Financial preferred shares can be found here: Stock Information | Power Financial Corporation 

Last Discussed: Item # 2.A. Added to PWFPRT:CA - Bought 50 at C$11.11 (5/23/20 Post); Item # 1.A. Bought 50 PWFPRT at C$16.94 (11/20/19 Post)

I decided to add 100 shares after I prepared my list of reset dates. 

As noted above, this preferred stock resets its coupon at a 2.37% spread to the five year Canadian government bond on 1/31/24, using the yield of that bond as of the 30th day prior to the reset date. So the reset is not far away. 

When I purchased this lot, the 5 year Canadian government bond had a 4.03% yield. With the spread of 2.37%, and just assuming a 4.03% yield on the calculation date, the new coupon for five years would be 6.4% using  that assumption for the 5 year yield. The yield would be 8.56% at a C$18.7 total cost per share which is high for an investment grade preferred stock. The yield would be somewhat high in my opinion even if it was assumed that the 5 year Canadian bond had an annual average 5% yield for the five year period starting after the reset. 

New Average Cost per share: C$16.35 (200 shares)

(If the reset coupon was at 6.4%, the yield would be 9.79% using that AC per share which includes C$3 in commissions for 3 purchases)

Par Value: C$25

Dividends: Paid quarterly and non-cumulative

Coupon: 2.37% spread to the 5 year Canadian government bond

Next Reset: 1/31/2024, using the 5 year Canadian bond yield 30 days prior to the reset date. If that day is a holiday, then the yield for the first business day thereafter will be used in the coupon calculation. 

Last Reset Coupon: January 2019 at 4.215% That coupon indicates that the 5 year Canadian Bond yield was then at 1.845%. 

Yield at AC Using 4.215%: 6.445% While that is an acceptable current yield, I would not have averaged up unless I thought it was probable that the current would reset soon at a higher rate.  Any 5 year Canadian bond yield at 4% or higher on the computation date would be viewed as positive for the share price in the coming months. 

Last Ex Dividend: 7/7/23 (so 2 more quarterly payments at the current coupon) 

Credit Rating for Preferred Stock: A-/P-1 low from S&P and Pfd-2-High from DBRS. 

The DBRS Pfd-2 high rating is equivalent to BBB+ for S&P. (see page 8, Raymond James Canadian Preferred Shares.pdf This is an investment grade preferred stock. 

Credit Ratings | Power Financial Corporation

Taxation: Canada will withhold a 15% tax for dividends paid into a U.S. citizens taxable account which is where I own the Canadian reset equity preferred stocks. 

Claiming Foreign Taxes: Credit or Deduction? | Charles Schwab

While I have not researched the subject, the withholding may not happen when the dividends are paid into a U.S. citizens retirement account since there is a Canadian tax applied to income at the corporate level. For pass through entities like REITs, where a tax is not paid at the corporate level, Canada will tax distributions paid by those entities, even when paid into a retirement account. 

Goal: As with all Canadian preferred stocks, the goal consists of both income generation and trading gains. I want to earn more on my long term CAD position than I would by leaving the cash idle. 

POW:CA/PWCDF Sell Discussions: The ordinary POW:CA shares trade on the U.S. pink sheet exchange and are priced in USDs. PWCDF - Power Corp. of Canada Schwab charges a commission now for pink sheet trades and other brokers may not permit their customers to enter new buy orders. Item # 1. Eliminated PWCDF - Sold 100 at US$33.65 (12/16/21 Post)(profit snapshot = US$1,852.93); Item # 1.D. Sold 10 PWCDF at $17.2; 10 at $18.13; 10 at $19.31(7/11/20 Post)(profit snapshot $82.19); Item # 4 Sold 100 PWCDF at $22.03 (10/5/19 Post)(profit snapshot $110.05); Item # 1. Sold 10 PWCDF at $16/31 (5/9/20 Post),(profit snapshot = $6.6);  Item # 4.A. Sold 100 PWCDF at $23.56 (7/22/17)(profit snapshot= $141.95); Item # 1 under "Portfolio Management": Sold 400 POW:CA at C$31.05-Update For Portfolio Positioning And Management As Of 4/29/16 - South Gent | Seeking Alpha (profit snapshot after conversion from CADs to USDs = $360.45); Item # 2 Sold 100 PWCDF at $28.07 (11/22/14 Post)(profit snapshot =  $210.03);  Item # 5 Sold 100 PWCDF at $28.83 (8/2/14 Post)(profit snapshot = $138.71). 

Power Financial Trades: Power Corporation acquired the shares of Power Financial that it did no own in 2020. February 13, 2020 - Power Corporation and Power Financial Announce Completion of Reorganization and the Determination of the Final Offer Price for the Pre-Emptive Right I had several profitable trades in Power Financial before its acquisition using both the CAD price shares and the ordinary shares traded on the U.S. pink sheet exchange and priced in USDs. Item # 1A. Sold 50 POFNF at US$27.04 (1/8/2020 Post)(profit snapshot US$299.2); Item # 1.B. Sold 50 PWF:CA at C$35.14 (1/8/20 Post)(profit snapshot C$480); Item # 2 Bought 50 POFNF at US$20.96  (8/14/19 Post); Item # 5.A. Bought 50 PWF:CA at C$25.5 (1/23/19 Post); Item # 4.A. Bought 50 PWF:CA at C$27.73 (12/23/18 Post)(profit snapshot C$161)-Item # 2.A. Sold 50 of 100 PWF:CA at C$30.99 (3/31/19 Post)

2. Small Ball Buys: 

A. Started GBDC - Bought 10 at $14.78: 

Quote: Golub Capital BDC Inc. (GBDC) - Externally Managed BDC 

GBDC SEC Filings

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

Previous Round-Trip: Item # 1.B. Eliminated GBDC  (9/12/2020 Post)(profit snapshots = $24.01); Item # 1.K. Started GBDC-Bought 10 at $12.32; 10 at $11.75 and 5 at $11.2(7/11/20 Post)

I discussed recently buying 2 Golub SU bonds. Item # 1.A Bought 2 Golub BDC 3.375% SU Maturing on 4/15/24 at a Total Cost of 97.749 (7/22/23 Post); Bond Page | FINRA.org 

Dividend: Quarterly at $.37 per share ($1.48 annually), last raised from $.33 effective for the 2023 third quarter payment which was raised from $.30 effective for the 2022 4th quarter payment. 

GBDC Dividend History | Seeking Alpha

A 4 cent per share special distribution went ex dividend on 8/17/23

A BDC that has loans set at spread to short term rates will be generating more net investment income as short term rates started to rise last year, assuming no material increase in non-accruing loans. The uptrend in short term interest rates have consequently allowed GBDC to increase its dividend but a dividend cut is possible with a significant downtrend in short term rates too. 

Yield at $14.78: 10.01% (Excludes special dividend and assumes continuation of the $.37 quarterly dividend which may not happen)  

Next Ex Dividend: 8/31/23 for regular dividend.  

Net Asset Value Per Share History: Stable for a BDC 

6/30/23   $14.83

12/31/22  $14.71

12/31/21  $15.26 

12/31/20  $14.6

12/31/19  $16.66

12/31/18  $15.97

12/31/17   $16.04 

12/31/16   $15.74

12/31/15  $15.89

12/31/14   $15.55

12/31/13   $15.23 

12/31/12   $14.66 

IPO (April 2010): Priced at $14.5 per share, with proceeds after underwriters' commission at $13.485 per share. Prospectus 

Last Earnings Report: SEC Filed Earnings Presentation for the Q/E 6/30/23 

NII per share: $.44 after adding $.01 for a non-cash amortization expense

100% Floating rate loans

Non-accrual investments as a percentage of total at amortized cost and fair value: 1.8% and 1.5% respectively

Golub Assessment of  Credit Risks: 

10-Q for the Q/E 6/30/23 (Summary of investments starts at page 8)

B. Added to NNN - Bought 2 at $39.66; 2 $39.21; 2 at $38.7 : 

Quote: NNN REIT Inc. - Net Lease REIT, similar to Realty Income

Cost: $235.14  

Retail Properties | Our Portfolio | NNN REIT

NNN SEC Filings

Average cost per share: $41.7 (25 shares)

Dividend: Quarterly at $.565 per share ($2.26 annually), last raised from $.55 effective for the 2023 third quarter payment. 

NNN REIT, Inc. Common Stock (NNN) Dividend History | Nasdaq

Yield at AC = 5.42%

Last Ex Dividend: 7/28/23 (owned 7 shares as of)

Last Discussed: Item # 4.D. Added 3 NNN at $41.42; 2 at $40.1(8/5/23 Post) I discussed the last earnings report in that post and have nothing further to add here. SEC Filed Earnings Press Release

C. Added to CAG - Bought 2 at $31.16; 3 at $30.46; 2 at $30.04: 

Quote: Conagra Brands, Inc.

Cost: $213.75

CAG SEC Filings

CAG Analyst Estimates | MarketWatch Earnings growth is predicted to be sluggish, but the P/E multiple using the next 12 month consensus estimate is about 11 based on yesterday's closing price of $30.36. 

Brands | Conagra Brands

Average cost per share: $31.56 (12 shares)

Dividend: Quarterly at $.35 per share ($1.40 annually), last raised from $.33 effective for the 2023 third quarter payment. 

Conagra Brands, Inc. (CAG) Dividend History | Seeking Alpha

Yield at New AC :  4.44% 

Last Ex Dividend: 7/28/23

Last Discussed: Item # 3.E. Restarted CAG - Bought 5 at $33 (7/15/23 Post) I discussed the last earnings report in that post and have nothing further to add here. SEC Filed Earnings Press Release

Last Eliminations and Pares: Item # 3.A. Eliminated CAG in Vanguard Taxable Account - Sold 20 at $38.27  and Item # 3.B. Eliminated CAG in Schwab Account - Sold 22+ at $38.36 (12/20/22 Post)(profit snapshots = $214.41); Item # 5.A. Eliminated CAG in Fidelity Account - Sold 18+ at $37.07 (12/6/22 Post)(profit snapshot = $52.4); Item # 6.B. Pared CAG in Vanguard Account - Sold 5 at $36.66 (11/8/22 Post)  

D. Added to O - Bought 3 at $58.97; 1 at $58.63; 2 at $58.08; 2 at $56.9 : 

Quote:  Realty Income Corp. (O) - A Net Lease REIT

Cost: $468.48

SEC Filings

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Last Discussed: Item # 6.M. Restarted O - Bought 1 at $57.78; 1 at $55.83 (10/18/22 Post) 

Last Round-Trip: Item # 1. Eliminated Realty Income (O)- Sold 100 at $52.37 -Seeking Alpha (profit snapshot $1,579.5)-Item # 6 Bough 100 Realty Income (O) at $36.96 (12/10/13 Post)

New Average cost per share: $57.91  (10 shares)

Dividend: Monthly at $.2555 per share ($3.066 annually), last raised from .2550 effective for the July 2023 payment. The monthly rate was $.1809 in the 2013 first quarter and $.1265 in the 2007 first quarter payment. 

Realty Income Corporation (O) Dividend History | Seeking Alpha

Realty Income raises the dividend by negligible amounts. While this has resulted in qualifying as a Dividend Aristocrat, the end result is a slow doubling of the dividend, with the last doubling requiring almost 15 years.   

I am not reinvesting the dividend.  

Yield at AC = 5.294%  (using the current penny rate)

Next Ex Dividend: 8/31/23

Last Earnings Report (Q/E 6/30/23): 

SEC Filed Press Release and Supplemental (debt summarized starting at page 8 of the Supplemental) I own a few Realty Income SU bonds. 

GAAP E.P.S. = $.29

Normalized FFO per share: $1.02, unchanged from the 2022 second quarter. The primary adjustments to GAAP E.P.S. will be to add back certain non-cash expenses, primarily depreciation and impairment charges, and to deduct gains from selling real estate.  

AFFO per share at $1, up from $.97

Net Income to AFFO Calculations: As a net lease REIT, the largest adjustments to FFO will be to deduct revenues created by the straight line accounting convention and to add back certain non-cash expenses.  

Occupancy: 99%

2023 Guidance: AFFO per share between $3.96-4.01

Properties: 13,118

Approximate Leasable Square Feet: 255,469,400

Analyst Reports (available to Schwab customers): 

Morningstar (8/3/23): 4 stars with a fair value of $76, no moat. 

S&P (8/7/23): 4 stars with a 12 month PT of $66

Goal: With a stock like Realty Income, the goal has to be modest. An 8% annual total return is viewed as acceptable to me. 

E. Added to KHC - Bought 5 at $33.75: 

Quote:  Kraft Heinz Co.

KHC Analyst Estimates | MarketWatch

KHC SEC Filings

Cost: $168.75

New Average cost per share:  $34.8  (15 shares)

Dividend: Quarterly at $.40 per share

Dividend History | The Kraft Heinz Company

Yield at New AC per share: 4.6%

Next Ex Dividend: 8/31/23

I discussed KHC in my last post, where I summarized the most recent earnings report, and nothing further to add here. Item # 1.E. Added to KHC - Bought 5 at $35 (8/12/23 Post); SEC Filed Earnings Press Release (F/Q ending 7/1/23)

Kraft was a far better stock before acquiring Heinz and spinning off Mondelez on 10/1/2012. Spin-Off Information | Mondelēz International, Inc. The Heinz acquisition in 2015 was too costly and a very bad idea IMO. Why Did The Kraft Heinz Merger Fail?

I bought and sold Kraft in 2009 and 2011, but lost interest in the stock after the Mondelez spin out. 

2009 KFT 200 shares +$570.47

  

2011 KFT 100 Shares +$131.1

Last Elimination: Item # 5.C. Eliminated KHC -Sold 5 at $42.44; 10+ at $42.33 (1/16/23 Post)(profit snapshots = $125.25)

F. Added to WPC - Bought 1 at $64.4; 2 at $63.95: 

Quote: W. P. Carey Inc. (WPC) - A Net Lease REIT

Cost: $192.3

W.P. Carey has "a well-diversified portfolio of high-quality, operationally critical commercial real estate, which includes 1,475 net lease properties covering approximately 180 million square feet and a portfolio of 85 self-storage operating properties, as of June 30, 2023."

SEC Filings

Portfolio - W. P. Carey Inc.

2022 SEC Filed Annual Report

Last Discussed: Item # 4.E. Added to WPC - Bought 1 at $68.6; 1 at $67.27; 2 at $66.25- Fidelity Taxable Account (6/24/23 Post) I discussed the 2023 first quarter report in that post. SEC Filed Press Release and Supplemental

New Average cost per share this account:  $66.28 (20+ shares)

Dividend: Quarterly at $1.069 ($4.276 annually)

W. P. Carey Inc. (WPC) Dividend History | Seeking Alpha

Dividend raises usually occur each quarter but the amounts are insignificant. The raise for the 2023 second quarter was to $1.069 from $1.067 in the first quarter. 

There was one large increase when the penny rate went from $.66 to $.82 in the 2013 first quarter. The dividend is now on a much slower pace to double. 

Yield at New AC = 6.45%

Last Ex Dividend: 6/30/23

Last Earnings Report (Q/E 6/30/23): 

SEC Filed Press Release and Supplemental 

AFFO per share: $1.36, up from $1.31 in the 2022 second quarter "driven by the Company’s Real Estate segment, which generated AFFO of $1.36 per diluted share, up 7.1% from $1.27 per diluted share for the 2022 second quarter, primarily reflecting the impact of net investment activity, rent escalations and the accretive impact of the CPA:18 Merger, partly offset by higher interest expense."

The "net lease portfolio generated contractual same-store rent growth of 4.3% on a constant currency basis."

10-Q for the Q/E 6/30/23 ("On February 28, 2023, a related party of the tenant occupying our portfolio of 78 net-lease self-storage properties located in the United States provided notice of its intention to exercise its option to repurchase the properties. The purchase price will be calculated using the U.S. CPI as of the closing date.", page 18 This is referring to U-Haul. W.P. Carey Has a Self Storage Issue on Its Hands | The Motley Fool)

Debt is discussed starting at page 27 of the 10-Q. 

Senior Unsecured Debt Maturities: I own 10 bonds. 

Page 29, 10-Q

I own several of those bonds. The first to mature is a 4.6% SU maturing on 4/1/24. I own 4.  Bond Page | FINRA.org

I own 6 of the 4% SU maturing on 2/1/25. Bond Page | FINRA.org

  

Guides 2023 AFFO per share to $5.32- $5.38 

G. Restarted SAR - Bought 5 at $26.45: 

Quote: Saratoga Investment Corp. - Externally Managed BDC 

Cost: $132.25

SEC Filings

SEC Filed Annual Report for the F/Y ending 2/28/23 (Summary of risk factors starts at page 27 and ends at page 59)

Last Discussed: Item # 1.J. Sold 35 SAR at $18.65 (7/11/2020 Post)(profit snapshot = Net of $34.91)-Item # 2.F. Added 2 SAR at $22.7; 3 at $21.9; 2 at $16.2;  2 at $15.5; 1 at $14.46; 1 at $13.34; 1 at $12.58; 1 at $12; 2 at $11.26; 1 at $8.45; 1 at $6.67 (3/21/20 Post) I was peeved when this SAR skipped a quarterly dividend and then slashed the quarterly rate from $.55 to $.40 without the external management company making any adjustment to its more than generous compensation. I understood the reasons for the dividend skip and slash. 

In Item #7.A. below, I discuss buying 5 shares of SAZ, a SAR issued SU baby bond that has an 8.5% coupon. As noted there, I am not comfortable with this BDC borrowing money at that kind of rate. SAR has other exchange traded baby bonds with lower coupons: SAT, SAJ, and SAY. Saratoga Investment Corp. 6% Notes (SAT); Saratoga Investment Corp. 8% Notes (SAJ);  Saratoga Investment Corp. 8.125% Notes (SAY) 

Dividend: Quarterly at $.71 ($2.84 annually), last raised from $.6 effective for the 2023 third quarter payment. 

SAR Dividend History | Seeking Alpha

Yield at $26.45:  10.74%  (assumes continuation of $.71) 

I would not make an assumption that any BDC dividend payment will remain static. Movement up and down can be expected based on interest rate movements, loan non-accruals,  and realized capital gains/losses. 

The recent uptrend in short term interest rates have positively impacted NII for SAR and other BDCs that loan money primarily at spreads to short term rates while most debt is at fixed rates.  

Next Ex Dividend: 9/13/23

Net Asset Value per share history: 

5/31/23:  $28.48

5/31/22:  $28.69 

5/31/21:   $28.70

5/31/20:   $25.11
2/29/20:  $27.13  Form 10-K (p. 67)
11/30/19:  $25.3    Form 10-Q (p.3)

8/31/19 :   $24.47 Form 10-Q
2/28/19 :  $23.62
2/28/18 :  $22.96
2/28/17 :  $21.97 
2/29/16 :  $22.06
2/28/15 :  $22.70

Last Earnings Report (F/Q ending on 5/31/23): This is the first fiscal quarter. 

SEC Filed Press Release 

Net Investment Income per share: $1.35 

Adjusted NII per share: $1.08

The adjustment relates to changes in the accrued capital gain incentive fee. 

"Higher and rising interest rates are producing increased margins on our portfolio, and the general contraction of available credit is creating an abundant flow of attractive investment opportunities from high quality sponsors at increasingly improving pricing, terms and absolute rates. Saratoga continues to be well positioned for this environment on the asset side, with 85% first lien floating rate assets and a combined core portfolio yield of 12.7%, up from 8.5% last year and 12.1% last quarter, as well as on the liability side with largely fixed rate, interest only, essentially covenant free and non-amortizing liabilities, with final maturities occurring well into the future, primarily two through ten years out,” said Christian L. Oberbeck, Chairman, Chief Executive Officer and President of Saratoga Investment."

10-Q for the Q/E 5/31/23 (summary of investments starts at page 5; credit risk evaluations at page 110; estimated impact of interest rate changes on net investment income at page 136) 

Debt:

Page 86, 10-Q

Goal: Any total return in excess of the dividend. 

3. Small Ball Sells: 

For reasons that may have some deep and mysterious psychological origins, I bought the same stock in more than 1 taxable account, becoming something of a pack rat for stocks. That practice picked up steam when the brokers switched to no commission trades. I am now gradually eliminating most duplicate positions. 

A. Eliminated 1 of 2 Duplicate Positions in OFS - Sold 20 at $10.2: 

Quote: OFS Capital Corp - A BDC

Proceeds: $204

Management: External  

OFS SEC Filings

2022 Annual Report (Risk factor summary starts at page 28 and ends at page 62)

Website: Homepage - OFS Capital

Profit Snapshot: $134.2

Last Buy Discussions: Item # 3.F. Bought 40 OFS with an Average Cost Per share of $4.18 (11/7/20 Post); Item # 2.L. Added 5 OFS at $3.97-Fidelity Taxable (11/28/20 Post); Item # 1.K. Added 3 OFS at $4.5 -Fidelity Taxable (8/8/20 Post); Item # 3.E. Added 5 OFS at $9.66; 5 at $9.2; 5 at $8.7; 5 at $6; 5 at $5.65; 2 at $3.7; 10 at $3.79 (4/11/20 Post)

I am keeping the 131+ shares held in my Schwab account that have an average cost per share of $7.53. I am not reinvesting the dividend. I will consider adding to that position when a purchase will lower my AC per share, provided I have then eliminated my remaining duplicate position.  

I will continue to reduce my remaining duplicate position in my Fidelity account, see Item # 3.B. below, until the position is eliminated.   

Dividend: Quarterly at $.34 per share ($1.36 annually), raised from $.33 effective for the 2023 third quarter payment.  

OFS Dividend History | Seeking Alpha

Last Ex Dividend: 6/22/23 (owned all as of)

Next Ex Dividend: 9/21/23

Net Asset Value Per Share History: 

6/30/23:   $12.94

12/31/22:  $13.47

6/30/22:   $14.57 10/Q for the Q/E 6/30/22 at page 3 

03/31/21:  $11.96 10-Q at page 3 

12/21/20:  $11.85 10-K at page 69 

6/30/20:   $10.10
3/31/20:    $  9.71
12/31/19:   $12.46
9/30/19:    $12.74  
6/30/19:    $12.95   Page 2 10-Q
3/31/19      $13.04   10-Q
12/31/18    $13.10
6/30/18     $13.70
03/31/18   $13.67
12/31/17    $14.12
12/31/16    $14.82
12/31/15    $14.76
12/31/14    $14.24
12/31/13    $14.54

IPO Offering Price at $15 (November 2012) with proceeds after the underwriters' discount at $13.05 Final Prospectus Supplement

Last Earnings Report (Q/E 6/30/23)

Net Investment Income per share: $.38

Net Unrealized Depreciation of Investments per share: $.78 ("For the quarter ended June 30, 2023, we recognized a net loss on investments of $7.1 million, primarily due to unrealized depreciation of $4.3 million and $2.7 million on our structured finance securities and equity securities, respectively. For the quarter ended June 30, 2023, our loan portfolio experienced net gains of $1.0 million.") 

Net Asset Value per share: $12.94, down from $13.42 as of 3/31/23 

Non-Accrual Loans as of 6/30/23: $27.3M at amortized cost and $10.2M at fair value. The difference is the amount the nonaccrual loans have already been marked down and the writedowns are already reflected in 6/30/23 net asset value per share number.  

Weighted Average Yields: 

10-Q for the Q/E 6/30/23 (summary of investments starts at page 8)

Management Assessment of Credit Risks (p. 60, 10-Q)

Based on fair value, 95% of loans were at floating rates. 

Company Estimated Impact of Interest Rate Changes on Net Investment Income: 

B. Pared OFS Duplicate Position in my Fidelity Taxable Account -Sold 10 at $10.15:  

See Item # 3.A above. 

I sold my highest cost 10 shares. 

Proceeds: $101.5

Profit Snapshot: $48.3

Average cost per share before pare: $4.08

Average cost per share this account after pare: $3.89 (66+ shares)

Snapshot Intraday on 8/15/23 after pare

Yield at $3.89 AC: 34.96% (regular dividend only, assumes continuation of current penny rate) 

Goal: Any total return in excess of the dividends paid. 

OFS Realized Gains to Date: $637.61

The largest annual gain was $192.39 realized last year by selling 58+ shares in 3 separate transactions. 

Snapshots of prior Realized Gains (excludes above): 

2022 Fidelity Account 3 separate Sales 58+ shares +$192.39

RI

Of those realized gains, all were realized in taxable accounts except for 7 shares sold earlier this year in a RI account. 

Other Sell Discussions: Item # 3.D. Pared OFS in Fidelity Account - Sold 13.82 Shares at $11.32 (8/16/22 Post); Item # 4.B. Pared OFS in Fidelity Account - Sold 15.427 at $12.49 (6/15/22 Post)(profit snapshot = $60.07; contains snapshots of realized gains prior to 2022); Item # 4.D. Pared OFS in Fidelity Account - Sold 29+ at $13.06 (4/21/22 Post)(profit snapshot = $69.88); Item # 1.H. Pared OFS in Fidelity Account Sold 35 at $10.07- Highest Cost Lots That Could be Sold Profitably (7/22/21 Post)(profit snapshot = $12.44);; Item # 2.M. Pared OFS in Vanguard Taxable-Sold 20 at $7.2 (12/25/20 Post)(profit snapshot = $56.8); Item # 3.B. Sold 10 OFS at $12.04 (11/30/19 Post)(profit snapshot = $7.04); Item # 4.B. Sold 60 shares at $12 (11/13/19 Post)(profit snapshot = $13.11); Item # 3.A. Sold Highest Cost OFS Lots in Schwab Account - 50 shares at $12.27 and 50 at $12.47 (5/5/19 Post)(profit snapshots = $69.55)   

C. Eliminated CMCSA - Sold 25+ at $46.99: 

Quote: Comcast Corp. Cl A

Proceeds: $1,221.14

CMCSA Analyst Estimates | MarketWatch

CMCSA SEC Filings

Profit Snapshot: Net of $102.85

I am at a loss to explain the origin of the $1.30 wash sale which created that amount in phantom income. No CMCSA shares were bought 30 days before or after I sold the entire position. All of the CMCSA transactions in this account for the past 10 years are shown in the previous snapshot. The last transaction this year was a fractional share purchased with a dividend in April. This is just a mistake that hopefully Fidelity will correct without my intervention. Otherwise, I will just pay my tax on that $1.3. 

Rationale: I am reducing my exposure to low dividend yielding stocks. 

Dividend: Quarterly at $.29 per share

Last Ex Dividend: 7/3/23 

Last Discussed: Item # 3.D. Eliminated CMCSA in Vanguard Taxable Account - Sold 7 at $45.6 (8/5/23 Post)(profit snapshot = $35.56).   

D. Eliminated Duplicate Position in EPRT - Sold 13+ at $24.22 (Schwab Account): 

Quote: Essential Properties Realty Trust Inc. - A Net Lease REIT

Proceeds: $322.37

EPRT SEC Filings

10-Q 

Management: Internal

Profit Snapshot: Net of +$32.9

Last Discussed: Item # 6.I. Added to EPRT - Bought 2 at $19.19 - Fidelity Account (11/1/22 Post); Item # 4.N. Added to EPRT - Bought 2 at $19.95 (10/11/22 Post)

Dividend: Quarterly at $.28 per share, last raised from $.275 effective for the 2023 second quarter. The quarterly rate was at $.21 in the 2019 first quarter.  

Essential Properties Realty Trust, Inc. (EPRT) Dividend History | Seeking Alpha

Last Ex Dividend: 6/29/23

Last Earnings Report (Q/E 6/30/23):

SEC Filed Press Release 

Core FFO per diluted share = $.44, up from $.41

AFFO per diluted shares = $.41, up from .$38

Net Income to AFFO Calculation: 

The AFFO number is equivalent to cash available for distribution. The main deduction from FFO is the pretend revenue created by the straight line accounting convention. Non-cash revenue is not available for distribution.  

In the FFO calculation, the two primary adjustments to net income are to add back the non-cash depreciation expense and to deduct the gains from selling real estate.    

Properties: 1,742

Occupancy: 99.9%

Square Feet of Rentable Space: 17,194,366 

Weighted average lease term: 14 years 

Weighted average lease escalation: 1.9%

2023 Guidance: "The Company is increasing its guidance for 2023 AFFO per share on a fully diluted basis to a range of $1.62 to $1.65 from its previously announced range of $1.60 to 1.64."

The annual dividend rate is currently $1.12, so there is room for dividend increases. 

Long Term Debt: Too much variable rate debt IMO. I would prefer more of the $400M 3% SU that matures in 2031. 

10-Q at page 26 

EPRT also loans money secured by real estate:  

P.2o 10-Q 

I will consider adding to my remaining position held in my Fidelity account, provided each subsequent purchase reduces my average cost per share.   

E. Eliminated Duplicate Position in GMRE - Sold 15 at $9.82 - Fidelity Account: 

Quote: Global Medical REIT Inc. (GMRE)

Proceeds: $147.3

SEC Filings

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Management: Internal. When I first bought shares, management was external but underwent an internalization process thereafter that was accomplished by buying the external manager for $18.1M. Global Medical REIT Inc. Announces Internalization Transaction -July 9, 2020 

GMRE owns medical office buildings and other healthcare facilities. 

Portfolio as of 6/30/23: 

Profit Snapshot: $31.42

Last Discussed: Item # 2.G. Eliminated GMRE in Vanguard Taxable Account - Sold 20 Shares at $11.07 (1/20/23 Post); Item # 2.E. Pared GMRE in Schwab Account - Sold 15 GMRE at $10.46+ (1/30/23 Post) 

Last Buy Discussions: Item # 4.B. Added to GMRE in Schwab Taxable Account - Bought 5 at $8.64; 5 at $7.93; 5 at $7.55; 5 at $7.3 (11/11/2022 Post)

Average cost per share remaining position-Schwab Account: $8.41 (32+ shares). I turned off dividend reinvestment after the July 2023 payment. The current dividend yield at that AC number is 9.99%.

Dividend: Quarterly at $.21 per share. 

GMRE Dividend History | Seeking Alpha

Dividend coverage with cash flow is tight.

Last Ex Dividend: 6/22/23 (owned as of) 

Last Earnings Report (Q/E 6/30/23): 

SEC Filed Press Release and Supplemental 

GAAP E.P.S. = $.18, almost entirely generated by gains flowing from property sales which are excluded in the FFO and AFFO computations. 

In June 2023, GMRE "sold a portfolio of four medical office buildings in Oklahoma City, Oklahoma, at a cap rate of 6.5% receiving gross proceeds of $66 million, resulting in a gain of $12.8 million." GMRE  "the net proceeds from this disposition to pay down the balance of our variable rate debt, resulting in a leverage ratio as of June 30, 2023 of 44.5%." Most of the GMRE debt is priced at spreads to SOFR, so the company must be referring to that part of the variable rate debt that is not fixed through swap agreements that have various maturity dates. The details of those swap agreements are provided here: 10-Q at pages 17-18. 

FFO per share: $.21

AFFO per share: $.23. GMRE does not deduct routine maintenance expenses from FFO which is appropriate in triple net leases where that responsibility in contractually passed to the tenants. There are owned properties that are not leased in that manner, but I lack information on adjusting the FFO number by maintenance expenses paid by GMRE in those lease contracts. 

"The weighted average interest rate and term of the Company’s debt was 4.09% and 3.4 years at June 30, 2023." The weighted average interest rate will move higher as the interest rate swap agreements expire and interest rates remain elevated as that happens. 

Other Sell Discussions:  Item # 1.B. Eliminated GMRE - Sold 40 at $11.25 (6/6/20 Post)(profit snapshot = $87.86); Item # 4.A. Eliminated GMRE-Sold 98+ at $9.41 (11/28/18 Post)(profit snapshot = $159.1); Item # 1.B. Sold 10 GMRE at $11.22 (4/18/20 Post)(profit snapshot = $12.07); Item # 3.C. Sold 50 GMRE at $10.01 (5/23/2017 Post)(profit snapshot = $82.54); South Gent's Comment Blog # 7: Eliminated GMRE (12/17/2016)(discussing realized gains from several trades)

GMRE Realized Gains to Date: +$538.62

GMRE Preferred Stock: Global Medical REIT Inc. 7.5% Cumulative Preferred Stock Series A  (GMRE.PRA); Prospectus 

I own shares in this preferred stock which has more dividend protection than the common. Item # 5.I. Added to GMRE.PRA - Bought 5 at $23.06 (10/25/22 Post); Item # 4.C. Bought 10 at $24.66 (10/11/22 Post); Item # 2.A. Bought 10 GMREPRA at $21; 5 at $16.88 (4/18/20 Post) 

GMREPRA Average cost per share: $21.88 (30 shares; yield at 8.57% at AC per share) 

Prior GMREPRA Sell Discussions: Item # 1.B. Sold 70 GMREPRA at $25.87 (4/24/19 Post)(profit snapshot = $208.36); Item # 1.A. Sold 30 GMREPRA at $24.84 (2/20/19 Post)(profit snapshot = $9.79)

4. Treasuries Purchased at Auction: 

Next week, I intend to buy only the 4 month T Bill that will be auctioned on Wednesday. 

A. Bought 3 Treasury Bills at the 8/14/23 Auction: 

91 Day Bill

Matures on 11/16/23

Interest: $40.15

Investment Rate: 5.456%

B. Bought 3 Treasury Bills at the 8/16/23 Auction: 

119 Day Bill

Matures on 12/19/23 

Interest: $52.61

Investment Rate: 5.49%

5 . Corporate Bonds: 

The bond purchased discussed in Items A., B. and C. were bought under Fidelity's corporate bond program. 

These bonds are sold at par value and have limited call protection. 

Calls are at par value + accrued and unpaid interest. 

The time for a call would be an interest payment date.  

A. Bought 1 Toronto Dominion 6.1% SU Maturing on 8/17/27: 

Issuer: Toronto-Dominion Bank (TD) - USD Priced Shares

TD  Analyst Estimates | MarketWatch

I own the common stock, which I last discussed here:  Item # 2.N. Pared TD -Sold 1 at $70.54 (2/20/23 Post)(reduced position to 35 shares with an average cost of $51.08); Item # 1.F. Pared TD -Sold 2 at $82 (1/27/22 Post) 

Interest will be paid quarterly.  

Call protection is for 1 year.  

So, if the bond is not called effective for 8/17/24, there is only 3 months of call protection and so on until maturity. 

Credit Ratings: A1/A

I currently own only 11 bonds in taxable account that mature in 2027. I own 3 TIPs that mature that year in a Roth IRA account. 

B. Bought 1 UBS 5.7% SU Maturing on 11/18/24: 

Interest payments are made quarterly.  

Credit Ratings: Aa3/A+

Call Protection: 6 Months, callable on quarterly interest payment dates staring on 2/18/24.  

C.  Bought 1 Jefferies 6.5% SU Maturing on 8/18/25: 

Issuer: Jefferies Financial Group Inc. (JEF) 

JEF Analyst Estimates | MarketWatch

JEF SEC Filings 

Credit Ratings: Baa2/BBB

Call Protection: 1 year, callable on 8/18/24 and 2/18/25

D. Bought 1 WPP Finance 3.75% SU Maturing on 9/19/24 at a Total Cost of 97.546: 

Issuer: Wholly owned subsidiary of  WPP PLC ADR (WPP) who guarantees the notes. 

WPP Analyst Estimates | MarketWatch

Investors | WPP

2023 Interim Results | WPP

New Finra Page: Bond Page | FINRA.org

Prospectus 

Credit Ratings: Baa2/BBB

YTM at Total Cost: 6.098% 

Current Yield at TC  = 3.844%

I now own 4 bonds. 

E. Bought 1 Prospect Capital 3.706% SU Maturing on 1/22/2026 at a Total Cost of 90.885: 

Issuer:  - Externally Managed BDC

New FINRA Page: Bond Page | FINRA.org

Credit Ratings: Baa3/BBB-

YTM at Total Cost: 7.8945%

Current Yield at Total Cost: 4.0777%

This is my limit for this issuer. 

6. Equity Preferred Stocks: 

A. Started PNFPP - Bought 10 at $22.15; 5 at $21.75 : 

Quote: Pinnacle Financial Partners Inc. 6.75% Preferred  Series B (PNFPP) 

Cost: $330.25

Issuer: Pinnacle Financial Partners Inc. (PNFP) - A Bank Holding Company 

PNFP Analyst Estimates | MarketWatch

PNFP SEC Filings 

PNFP SEC Filed Earnings Press Release for the Q/E 6/30/23 

Prospectus

Par Value: $25

Dividends: Paid Quarterly, non-cumulative, and qualified 

Callable on or after 9/1/25

Average cost per share: $22.02 (15 shares)

Yield at $22.02. : 7.66%

Ex Dividend: 8/16/23 (owned as of) 

I am replacing the PLYMPRA shares owned in this account that are about to redeemed at the $25 par value + accrued and unpaid dividends. I purchased those shares at $25. 

7. Exchange Traded Baby Bonds: 

A. Bought 5 SAZ at $24.9: 

Quote: Saratoga Investment Corp. 8.5% Notes due 2028 (SAZ) 

Issuer: Saratoga Investment Corp.  (SAR) - Externally Managed BDC

SAR SEC Filed Earnings Press Release for the Q/E 6/30/23 

SAZ Prospectus (April 2023)

Placement in Capital Structure: Senior Unsecured Bond

Par Value: $25 

Trades Flat: 

Interest Paid Quarterly 

Last Ex Interest Date: 8/14/23 (day of purchase)

Coupon: 8.5%

Current Yield at $24.9: 8.53%

Maturity: 4/15/2028 unless called earlier at issuer's option

Issuer Call Option: On or after 4/15/25 at par + accrued and unpaid interest. Call protection will be 3 years from the IPO. 

I would prefer that this BDC sell investments rather than to raise capital by selling 8.5% SU notes. There is not much cushion between the weighted average yield of SAR's loans and the SAZ coupon, which is fine as long as there are no defaults and major writedowns of loans purchased with high cost leverage. But then, the external manager earns a base management fee that is paid on total assets including those bought with debt and may earn an incentive fee as well. 

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.