ADX, AOD, ARGOPRA, BWBBP, CAG, FBIOX, KHC, GBDC, JRI, NNN, O, OLP, PBA, PLYM, RVT, SLG, TCBIO, TFINP, WPC

Economy: 

The August ISM services index rose to 54.5 from 52.7% in July. The New Orders component, generally viewed as a leading indicator, rose to 57.5% from 55%. The Price component increased to 58.9% from 56.8%. Any number over 50% indicates expansion. 

The FED reported that household net worth increased by $5.494 trillion in the second quarter. Z1.pdf

The Atlanta FED's GDP Model is forecasting that 3rd quarter real GDP growth is tracking at +5.6% as of 9/6/23. GDPNow- Federal Reserve Bank of Atlanta

How much shrink and retail theft cost Lowe's, Target, Macy's

Apple shares fall after WSJ reports that China banned iPhone use by government employees Bloomberg later reported that China might extend the ban to employees of state owned enterprises and other government backed entities. While China may justify those actions based on security concerns, China is instead targeting Apple as its response to U.S. sanctions against Huawei Technologies.

The WSJ published an article on a ghost city built in Malaysia by a joint venture that is 60% owned by China's Country Garden real estate company. A picture of that $100B ghost city reveals multiple architecturally boring high rises offering mostly vacant "luxury" units located on reclaimed land with views of a power plant and other unpleasant looking structures.  The $100 Billion Luxury Complex That’s Sitting Empty and Unfinished - WSJ

One firm estimates that there are between 23 to 26 million unsold apartments in China, a vacancy rates sufficient to house the population of Italy. A Weaker China May Be a More Dangerous One - The Atlantic A Peking University professor estimates that the unemployment rate for 16 to 24 year olds is close to 50%.  

++++

Allocation Shifts Discussed in this Post: 

Treasury Bills Purchased at Auction: $10,000 in principal amount (I do not net out proceeds received with the T Bills purchased. On a weekly basis, the amount of T Bill purchases will be between 80% to 100% of the proceeds received from maturing ones. That will not vary much until there is a significant decline in yields that causes me to take on more risks) 

Corporate Bonds: $2,000 in principal amount 

Common Stocks: -$1,054.23

(consisting of $2,071.18 in proceeds minus $1,016.95 in purchases)

Stock Funds: +$379.15

(Of the stock fund purchases, all but $50 was used to buy stock CEFs with high dividend yields, including two that pay monthly)

Net Outflow Common Stocks/Stock Funds: -$675.08

Realized Gains Common Stock/Stock Funds: +$595.08

Weighted average yield common stock purchases: 6.48%

Net Outflow Equity Preferred Stocks: -$379.15

(consisting $843.83 in proceeds, including $400 received in an issuer redemption at par value, minus $464.68 in purchases with a weighted yield of 8.466%)

Realized Gain Equity Preferred Stock: +$47.58 

2023 Net Outflow Common Stocks/Stock Funds: -$37,547.43

The reduction in my stock allocation is primarily due to the risk free yields offered by treasury bills and CDs. 

++++

Trump and His Cult: 

RealClearPolitics - Election 2024 - 2024 Republican Presidential Nomination

RealClearPolitics - Election 2024 - General Election: Trump vs. Biden The average of the polls has this race in a dead heat. 

The group that won Trump the election in 2016 may win it for him again in 2024 

Biden is tagged as being responsible for inflation even though he is not responsible. 

Most of the responsibility lies with the Federal Reserve who created far too much money in 2020-2022 and kept the expansionary ZIRP and QE monetary policies until annual inflation was already running over 8%. 

Other causes include supply chain shortages created by the pandemic and rapid surges in demand after the pandemic's negative impacts faded. 

I would note that inflation is trending down, with the annual CPI increase just above 3%, notwithstanding a federal government budget deficit that will be near $2 trillion in the F/Y ending in September 2023. 

{The parabolic increases in debt will ultimately result in a long series of failed treasury auctions where the Federal Reserve has no choice but to monetize the debt by buying what can not be sold, a depression with problematic inflation and the USD probably losing its status as the world's reserve currency. I view those results as inevitable. The only unresolved issue is when.} 

If Trump was President now, with inflation numbers being identical which would be the case IMO, republicans would not blame him but the democrats.

So Biden starts off with close to 1/2 of the voting population assigning blame to him for anything that goes wrong and refusing to credit him with anything that is positive. Republicans would give a Democrat President an unfavorable rating even if the economy was in an optimal condition by any objective evaluation. That is just the way it is and  always will be.  

{One example that I use to sum up the republican mentality is how they respond to identical actions taken by a republican and a democrat President. For example, both Trump and Obama ordered cruise missile strikes against Syria after that country used chemical weapons. In polls, 86% of republicans approved of Trump's response but only 22% approved of the same action taken by Obama. The polling for Democrats remained about the same irrespective of the party affiliation of the President. Republican voters have flip-flopped on airstrikes in Syria; On Syria, 'reflexive partisanship' doesn't apply to both parties; Ryan and McConnell flip-flop on use of force in Syria to deter chemical weapons - The Washington Post}   

Biden's unpopularity could give Trump his shot at reclaiming power | CNN Politics

Trump’s co-defendants are already starting to turn against him - POLITICO

Mar-a-Lago IT worker struck cooperation agreement with special counsel, his former lawyer says The IT worker is Yuscil Taversas, identified in the indictments as "Trump Employee 4". He was formerly represented by Stanley Woodward, a lawyer paid by Trump's PAC, who also represents the indicted Walt Nauda. Revised Trump indictment raises new questions about lawyer conflicts of interestTrump valet lawyer has three potential conflicts of interest, prosecutors say -The Guardian

Trump is liable in the second E. Jean Carroll defamation case, judge rules; January trial will determine damages Donald is one loose cannon. After being held liable for defamation by a jury in the first Jean Carroll defamation case, he publicly repeated the defamatory statements after the jury verdict, an extremely stupid and arrogant act by any measure. 

Donald Trump Suffers Five Legal Setbacks in One Day- Newsweek (9/7/23)

Peter Navarro: Former Trump adviser convicted of contempt of Congress charges Navarro may be hoping that a republican dominated appeals court or the republican Justices on the Supreme Court will conclude, as a matter of law, that he had the right to disobey the subpoena. Navarro is represented by Stanley Woodward. Bannon was convicted of the same offense earlier and his case is on appeal. 

The flagrantly anti-democracy party in Wisconsin wants to impeach the recently elected Democrat state Supreme Court Justice Janet Protasiewicz before she has an opportunity to vote on a single case. 

The Wisconsin Judicial Commission has already rejected the obviously frivolous grounds advanced for the impeachment. 

Ms Protasiewicz recently won an election by 11% over her republican challenger and the republicans are upset by that result. 

The plan is for the republican majority in the state House to impeach her and then for the republican controlled State Senate to refuse to conduct a trial. Under Wisconsin state law, the result would be to prevent her from voting while the impeachment proceeding was unresolved and to actually avoid impeaching her which would give the Democrat governor an opportunity to replace her. 

Wisconsin Republicans Threaten to Impeach Liberal State Supreme Court Justice - The New York Times; Opinion | Republicans try to wreck the rule of law - The Washington Post; Wisconsin Republicans Try to Subvert Democracy, Again - The New York Times; The Republican Party’s plan to rule the state of Wisconsin forever - Vox

Judge strikes down north Florida congressional districts and orders lawmakers to redraw map - POLITICO Florida's anti-democracy party drew congressional districts in a transparent effort to prevent a black  Democrat Al Lawson from winning an election. 

Transparent racial gerrymandering was also performed by Tennessee republicans when their super majority carved up Nashville into three parts, joining each part with heavily republican rural areas and small towns. One of those 3 parts was North Nashville, where a most of the black voters reside. Lawsuit says Tennessee’s US House and state Senate maps discriminate against communities of color | PBS NewsHour 

The republicans in the state legislature decided that Nashville would no longer be allowed to elect a democrat to Congress, which is consistent with the Trumpsters strong and growing authoritarian impulses. Is Tennessee a Democracy?-The Atlantic (article written by Anne Applebaum, a conservative intellectual and a frequent author of books about authoritarian regimes and anti-democracy political movements) 

The Supreme Court recently struck down a racial gerrymandered map created by republicans in Alabama. The fight over Alabama's congressional map returns to court-NPR Notwithstanding this ruling the Alabama republicans are persisting in an effort to dilute the voting power of blacks. 

Alabama republicans pass redistricting map that defies Supreme Court ruling - YouTube; 

Court rejects Alabama congressional map in racial gerrymandering case (9/5/23) Two of the three judges on the appellate panel were nominated by Trump. Opinion | How Alabama ran afoul of two Trump-nominated judges - The Washington Post

Racial gerrymandering in the south is a modern resurrection of Jim Crow voting laws. How Jim Crow-Era Laws Suppressed the African American Vote for Generations | HISTORY

Alabama Attorney General Steve Marshall says he has right to prosecute people who facilitate travel for out-of-state abortions 

+++

Putin and His Empire of Misery:  

Russian drone attack in Odesa region hits Danube port infrastructure; Russian drones hit Ukrainian port near Romania border, Ukraine says - YouTube This port is located across the Danube River from Romania's territory. 

Russians are attempting to destroy the port infrastructure necessary for Ukrainian grain exports. 

Ukraine claimed that at least one Russian drone exploded on Romania's territory. Romania has now confirmed that the debris of a Russian drone was found on its territory. Romania is a NATO member.  Romania says parts of Russian drone fell on its territory-The Jerusalem Post Romania is downplaying what happened IMO. 

Of course, attempting to blow up grain and grain infracture facilities is just really bad PR for Russia. 

Attacking facilities located close to a NATO country with drones is just reckless and incredibly stupid. 

Russian Orcs targeted with missiles a crowded market in Kostiantynivka, murdering at least 17 civilians who were simply shopping. 17 killed during attack on market in 'peaceful city' - BBC News Committing war crimes is just a daily routine for Russians, as easy as breathing for them, and that is not going to change. 

Russia is covering aircraft with car tires, potentially to protect them from Ukrainian drones  

Russia will soon hold fake elections in its occupied Ukrainian territory. The candidates include Russian soldiers and other Russian citizens.  

The WSJ reported that Russian authorities in Crimea routinely parade "traitors" in front of cameras. Traitors include anyone caught singing a Ukrainian song in public or saying Slava Ukraine. In Crimea, Pro-Ukraine Feelings Prompt a Russian Crackdown - WSJ   

Deepening rift among Republicans threatens future of Ukraine aid - The Washington Post

Russian state TV is savoring Tucker Carlson's statements - YouTube

'Elon Musk has directly aided Russia' by turning off satellite - YouTube;   Elon Musk Acknowledges Withholding Starlink Service to Thwart Ukrainian Attack - The New York Times The attack was planned on Russian naval vessels that were docked in Crimea which is internationally recognized Ukrainian territory. 

+++

1. Small Ball Buys: 

A. Added to RVT - Bought 5 at $13.95; 5 at $13.6: 

Quote: Royce Value Trust Inc. Overview - A Stock CEF

Cost: $137.75

RVT SEC Filings

Sponsor's website: Royce Value Trust (RVT)

2022 SEC Filed Annual Report (RVT discussion starts at page 22)

SEC Filed Semiannual Report for the Period Ending 6/30/23 (RVT discussions starts at page 38; cost of investments at $1.422+B with value at $1.753+B)

Average cost per share: $13.15 (25 + shares)

Dividend: Paid quarterly at a variable rate, almost entirely sourced from short and long term capital gains. 

I am reinvesting the dividend.  

Last 4 Dividends: $1.07 includes the one to be paid in the 2023 3rd quarter

Yield Using $1.07 and $13.15 AC = 8.14%

Last Ex Dividend: 9/8/23 (owned all as of)

Data Date of 8/31/23 Trade: 

Closing Net Asset Value per share: $15.95

Closing Market Price: $13.91

Discount: -12.79%

Average 3 Year Discount: -9.26%

Sourced:  RVT-CEF Connect (Click "Pricing Information" Tab)  

Royce Value Trust (RVT) Portfolio | Morningstar (unrated, lists top 25 holdings and I own none of them)

Last Sell Discussion: Item # 2.B. Eliminated RVT in Vanguard Taxable Account - Sold 10 at $17.5 (2/10/22 Post)(profit snapshot = $50.7)

Largest Gain to Date: Item # 1 Sold 505+ RVT at $15.89 (8/3/13 Post)(profit snapshot = $435.93)

RVT Realized Gains to Date: $791.5

B. Added 5 GBDC at $14.39; 5 at $14.13: 

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

Cost $142.6

Last Discussed: Item # 2.A. Started GBDC - Bought 10 at $14.78 (8/19/23 Post) I discussed the last earnings report in that post. SEC Filed Earnings Presentation for the Q/E 6/30/23

New Average cost per share: $14.52 (20 Shares)

GBDC Net Asset Value per share as of 6/30/23: $14.83

Regular Dividend: Quarterly at $.37 per share ($1.48 annually)

GBDC Dividend History | Seeking Alpha

Yield at $14.52: 10.19% (regular dividend only)

Last Special Dividend: $.04 per share, with a 8/17/23 ex dividend date. 

Last Regular Ex Dividend: 8/31/23 (owned 10 as of)

Maximum position: 100 shares

C. Added 5 OLP at $19.52; 5 at $19.05 :

Quote: One Liberty Properties Inc.  (OLP)

Cost: $192.85

Management: Internal

OLP SEC Filings

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Last Discussed: Item # 1.B. Added to OLP - Bought 5 at $20 (8/12/23 Post) I discussed the last earnings report in that post. SEC Filed Earnings Press Release

New Average cost per share: $20.40 (35 shares)

Dividend: Quarterly at $.45 per share ($1.8 annually)

OLP Dividend History | Seeking Alpha

Yield at New AC: 8.82%

Last Ex Dividend:  6/23/23

D. Added 10 AOD at $8.05: 

Quote: abrdn Total Dynamic Dividend Fund Overview - A Stock CEF

Cost: $80.5 

Investment Category: Monthly Income Generation

AOD SEC Filings

Sponsor's website: abrdn Total Dynamic Dividend Fund, Inc.

SEC Filed Semiannual Report for the Period Ending 4/30/23 (cost at $839.138+M with the value at $1.035+B)

Last Discussed: Item # 3.H. Added 2 AOD at $8.19 (7/15/23 Post); Item # 4.A. Added to AOD - Bought 5 at $8.21 (6/24/23 Post) 

New Average cost per share: $8.03 (97+ shares)

Dividend: Monthly at $.0575 per share ($.69 annually)

Yield at AC: 8.59%

Last Ex Dividend: 8/23/23 (owned 87+ as of)

Data Date of 9/1/23 Trade: 

Closing Net Asset Value per share: $9.31

Closing Market Price: $8.04

Discount: -13.64%

Average 3 Year Discount: -11.53%

Sourced: AOD  - CEF Connect

abrdn Total Dynamic Dividend (AOD) Portfolio | Morningstar (lists top 25 holdings)

E.  Added 2 KHC at $32.59: 

Quote: Kraft Heinz Co.

Cost: $65.18

KHC Analyst Estimates | MarketWatch

KHC SEC Filings

New Average cost per share = $34.27  (22 Shares)

Dividend: Quarterly at $.40 per share

Dividend History | The Kraft Heinz Company

Yield at New AC = 4.67%

Last Ex Dividend: 8/31/23 (owned 20 as of)

I discussed the last earnings report in this post: Item # 1.E. Added to KHC - Bought 5 at $35 (8/12/23 Post); SEC Filed Earnings Press Release for the F/Q Ending 7/1/23 

F. Added 3 CAG at $29.33; 3 at $29.15; 2 at $28.9: 

Quote: Conagra Brands, Inc.

Cost: $233.22

CAG SEC Filings

CAG Analyst Estimates | MarketWatch

Brands | Conagra Brands

New Average cost per share = $30.42  (25 shares)

Dividend: Quarterly at $.35 per share ($1.4 annually)

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

Yield at New AC = 4.6%

I discussed the last earnings report in this post: Item # 3.E. Restarted CAG - Bought 5 at $33 (7/15/23 Post); SEC Filed Earnings Press Release

G. Added $50 to FBIOX: 

Quote FBIOX | Fidelity Select Biotechnology Portfolio Overview 

Sponsor's Website; FBIOX 

Expense Ratio: .72%

FBIOX – Portfolio – Fidelity® Select Biotechnology | Morningstar

Recent performance has been poor. I would describe the fund as feast or famine with the later in effect for almost 3 years now. FBIOX – Fidelity® Select Biotechnology Fund Stock Price | Morningstar (Best Total Return Years Starting in 2013: +65.66% in 2013; 35.05% in 2014; +35.98% in 2019; and 38.34% in 2020)

3, 5 and 10 Year Annual Average Total Returns Compared to IBB (through 9/1/23)- IBB – Performance – iShares Biotechnology ETF | Morningstar

3 Years: 

IBB -.53%

FBIOX -1.97%

5 Years

IBB  1.46%

FBIOX +1.64

10 Years 

IBB 7.45%

FBIOX 7.92%

I would draw two conclusions. Investing in this sector using a mutual fund or ETF has been unrewarding. And, the FBIOX managers and Fidelity have not earned what they have been paid. 

H. Added 10 JRI at $11.09: 

Quote: Nuveen Real Asset Income & Growth Fund Overview - A Leveraged CEF

Cost: $110.9 

Last Discussed: Item # 1.F. Bought 20 JRI at $11.3 (9/2/2023 Post) I discuss this CEF in more detail in that post. 

To summarize, JRI has two primary problems. 

The first is the use of significant leverage that is priced at spreads to the short term SOFR rate. 

The second is that the fund owns common stocks, preferred stocks and bonds which will generally perform poorly when interest rates are rising in a material way.  2022  Annual Report at pages 22-34 The bonds have mostly long term maturities which I define as more than 10 years from today. The common stocks are utilities, energy infrastructure, and REITs, or what I would characterize generally as bond substitutes. The result is that Morningstar currently has a 1 star rating on this fund. Nuveen Real Asset Income and Growth (JRI) Portfolio | Morningstar 

JRI SEC Filings

Sponsor's website: JRI - Nuveen Real Asset Income and Growth Fund | Closed-End Fund | Nuveen

New Average cost per share: 

Dividend: Monthly at $.087 per share ($1.158 annually)

JRI Dividend History | Nasdaq

There is ROC support for the dividend. 

Next Ex Dividend: 9/14/23

Yield at New AC: (assumes continuation of current rate which may not happen)  

Data date of 9/5/23 Trade: 

Closing Net Asset value per share: $12.98

Closing Market Price: $11.04

Discount: -14.95%

Average 3 year Discount: -11.76

Sourced:  JRI - CEF Connect (Click "Pricing Information" Tab)

Last Elimination: Item # 3.A. Eliminated JRI in my Fidelity Taxable Account - Sold 130 at $12.13 (3/11/23 Post)

JRI Realized Gains to Date: $665.52

H. Added to NNN - Bought 2 at $38.55; 3 at $38.08: 

Quote:  NNN REIT Inc. - A Net Lease REIT similar to Realty Income (O)

Cost: $191.34

Retail Properties | Our Portfolio | NNN REIT

NNN SEC Filings

New Average cost per share: $41.13 (30 shares)

Dividend: Quarterly at $.565 per share ($2.26 annually) 

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

Yield at New AC: 5.495%

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

I discussed the last earnings report in this post:  Item # 4.D. Added 3 NNN at $41.42; 2 at $40.1 (8/5/23 Post); SEC Filed Earnings Press Release

5 Year Chart: Starting in 2021, the stock has mostly been in a channel between $40 to $50. The channel between $50 to $60 during 2019 ended with a sharp downturn in late February 2020 in response to the pandemic. 

Maximum Position: 100 shares

I. Added to O - Bought 1 at $55.46; 1 at $54.98: 

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

New Average cost per share: $57.35 (13 shares)

Dividend: Monthly at $.2555 per share, raised from $.2550 effective for the July payment. That kind of  increase is what this REIT does. I view it as meaningless. The monthly rate was at $.2130 in September 2013. 

Realty Income Corporation (O) Dividend History | Seeking Alpha

Yield at New AC (assumes no change in the last penny rate) = 5.346%

I discussed the last earnings report in this post. Item # 2.D. Added to O - Bought 3 at $58.97; 1 at $58.63; 2 at $58.08; 2 at $56.9  (8/19/23 Post)

J. Added to WPC - Bought 1 at $63.32: 

Quote: W. P. Carey Inc. (WPC)

SEC Filings

Portfolio - W. P. Carey Inc.

2022 SEC Filed Annual Report

New Average cost per share this account: $66.14 (21+ shares)

Dividend: Quarterly at $1.069 ($4.276 annually)

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

Yield at New AC = 6.465%

Last Ex Dividend: 6/29/23

I discussed the last earnings report in this post: 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);  SEC Filed Press Release

2. Small Ball Sells: 

A. Eliminated Duplicate Position in ADX - Sold 20 at $17.65: 

Quote: Adams Diversified Equity Fund Inc. (ADX) - Unleveraged Stock CEF

Management: Internal

ADX was formed just prior to the October 1929 crash and survived through the Great Depression. 

The leveraged CEFs did not survive for long after that crash.  

In addition to owning common stocks, ADX also owns 2.186+M shares of the CEF Adams Natural Resources Fund Inc. (PEO), formed at the same time, and shares office space and personnel with that fund. The common office address is 500 East Pratt Street, Suite 1300, Baltimore, MD. 

Proceeds: $349.09

ADX SEC Filings 

Profit Snapshot: $67.35

Last Buy Discussions: Item # 4.A. Added 15 ADX in Schwab Account at $14.76- (1/16/23 Post); Item #4.F. Added 5 ADX in Schwab Account at $14.65 (10/11/22 Post)(contains snapshots of realized gains starting in 2014, with the largest being $1,923.24 in 2015)

Sponsor's website: Adams Funds

Top 10 Holdings as of 6/20/23: 

SEC Filed Semiannual Report for the Period Ending 6/30/23 (common stocks cost at $1.497+B, valued at $2.403+B)

Principal Portfolio Changes 6 Months: 

Net Realized Gains: +$58.623+M

Net Investment Income: $9.317+M

Net Change in Unrealized Appreciation: +$259.828+M

5 Year Dividend History: 

The capital gain distributions are made in the 4th quarter. 

Data Date of 8/31/23 Trade:

Closing net asset value per share: $20.42

Closing Market Price: $17.63

Discount: -13.66%

Average 3 year discount: -14.55%

Sourced: ADX - CEF Connect (Click "Pricing Information" Tab)

Remaining Taxable Account ADX Position- Schwab Account: 30+ Shares with an average cost of $15.39. I am reinvesting the dividend. I will add shares only in this taxable account going forward. 

Some Prior Sell Discussions: Item # 3.B. Sold 100 at $15.24 (5/22/19 Post)(profit snapshot = $112.32): Item # 2.C.  Eliminated ADX - Sold 107+ Shares at $13.63 (3/4/17 Post)($183.26); Eliminated ADX  - Sold 467+ Shares Update On Closed End Fund Basket Strategy As Of 7/28/15 - South Gent | Seeking Alpha (profit snapshot = $1,923.24, scroll to "Deletions/Reductions Since Last Update"); Item # 4 Pared ADX Again-Sold 143 Shares at $13.97 (8/8/14 Post)(profit snapshot = $427.9); Item # 4. Sold 116 ADX at $13.61 (6/14/14 Post)(profit snapshot = $319.38)

Realized Gains 2008 to Date: $3,239.71

I have been trading ADX since 1983, but do not have profit snapshots prior to 2008. There were realized gains that would have been entered on my tax returns prior to 2008. 

B. Eliminated Duplicate Position in SLG - Sold 20+ at $39.32: 

Quote: SL Green Realty Corp. (SLG)  - Primarily a NYC Office REIT 

The Covid pandemic, and the related work-from-home ("WFH") trend, have negatively impacted NYC office properties and has resulted in dividend cuts (SLG) or suspensions (VNO) from Office REITs that have significant exposure. Those negative impacts are reflected in increased vacancy rates, lower rent increases for renewals, and more tenant concessions for new or renewal leases. The unanswerable question is how much longer will those negative impacts last. 

Proceeds: $801.39

SLG SEC Filings 

Properties - SL Green - NYC's Largest Commercial Landlord

Investment Categories: Equity REIT Common and Preferred Stock Basket Strategy, Monthly Income Generation/Bond Substitute

Profit Snapshot: Net of $68.26  

Last Discussed:  Item # 6.L. Added 1 SLG at $36.57 (11/1/2022 Post) 

Dividend: Monthly at $.2708 ($3.25 annually), reduced from $.3108 effective for the 2023 first quarter payment. Given the lower cash flow per share, discussed below, the dividend cut was prudent. 

Dividend History | SL Green Realty Corp.

Last Ex Dividend: 8/30/23 (owned as of)

Last Earnings Report (Q/E 6/30/23): 

SEC Filed Press Release and Supplemental 

FFO per share = $1.43, down from $1.87 in the 2022 second quarter. 

Manhattan Occupancy: 89.8%, inclusive of leases signed that have not yet commenced as of 6/30/23.  

Net Loss To Common Shareholders: $360.2M or -$5.63 per share which includes a $305.9M writedown, or -$4.44 per share, of the "carrying value of the leasehold interest at 625 Madison Avenue". 

"During the second quarter of 2023, the Company signed 43 office leases in its Manhattan office portfolio totaling 410,749 square feet. The average rent on the Manhattan office leases signed in the second quarter of 2023, excluding leases signed at One Vanderbilt, was $89.55 per rentable square foot with an average lease term of 8.3 years and average tenant concessions of 9.2 months of free rent with a tenant improvement allowance of $81.33 per rentable square foot." The mark-to-market on signed Manhattan leases was 2.2% lower for the second quarter than the previously escalated rents on the same spaces. 

Net Income to FFO Calculation to Funds Available for Distribution (FAD), also referred to as cash available for distribution or CAD (p. 14 of Supplemental):

Note the substantial decline in FAD Y-O-Y

In the 2023 second quarter, FAD per share was about $.866 per share ($59.712M ÷ 68.933M diluted shares/units = $.866232) The 3 monthly dividends paid during the second quarter totaled $.8124 per share. So the reduced monthly dividend was covered by FAD with some cushion.  

The FAD calculation eliminates the noncash revenue created by the straight line accounting convention and deducts maintenance expenditures referred to as "Non revenue enhancing recurring CAPEX".  

I would note that distinguishing between non-revenue enhancing CAPEX from revenue enhancing can allow for some fudging of the FAD number. 

As previously noted, SLG raised net cash proceeds of $174.2M by selling a 49.9% interest in 245 Park Avenue. SL Green Announces Sale of 49.9% Interest in 245 Park Avenue - SL Green; With $2 Billion Valuation, This Deal Gives New York Office Investors Some Relief The valuation of this property, as priced in the sale, provided some upside juice for the SLG stock.  

Remaining SLG Taxable Account Position: 36 shares with an average cost per share of $45.29. The current yield at that price is 7.175%.The prices paid have fluctuated widely, ranging from $19.55 on 3/24/23 to $71.95 on 10/28/21. I am reinvesting the dividend for as long as the likely reinvestment price lowers my average cost per share. 

SLG Preferred Stock: I have positions in SLG.PRI, held in two taxable accounts, which has a $25 par value and a 6.5% coupon. I plan on eliminating one of the duplicate positions.  

SU Bond: My only position in an SLG bond was redeemed at maturity last October. 

C. Eliminated PLYM - Sold 20 at $22.68 and Issuer Redemption of PLYMPRA at Par Value: 

Quote: Plymouth Industrial REIT Inc.

Proceeds: $853.6 with $400 in proceeds from PLYMPRA redemption

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

PLYM SEC Filings

Website: Plymouth Industrial REIT - Boston

Portfolio Map

10-Q for the Q/E 6/30/23 (debt discussed starting at page 12) 

Profit Snapshot: $212.59 

Last Discussed: Item # 2.E. Eliminated PLYM in my Vanguard and Schwab Taxable Accounts - Sold 20 at $22.75  (9/10/21 Post)(profit snapshots = $216.98)

Last Buy Discussions: Item # 1.Q. Started PLYM in Schwab Taxable-Bought 10 at $12  and Item 1.R. Started PLYM in Vanguard Taxable-Bought 10 at $11.92 (10/24/20 Post); Item #1.F. Started PLYM Fidelity Account-Bought 10 at $12.85; 5 at $12.1; 5 at $11.8 (8/1/2020 Post)

Dividend: Quarterly at $.225 per share, last raised from $.22 2023 second quarter payment. 

The quarterly dividend was slashed from $.375 to $.20 effective for the 2020 second quarter payment. 

I would characterized this history as poor which is the primary reason for harvesting my profit. 

Yield at $22.68 Sale Price: 3.97%

Last Ex Dividend: 6/29/23 

Last Earnings Report (6/30/23): 

SEC Filed Press Release and Supplemental 

FFO to AFFO Computation: 

Call of PLYMPRA: This REIT also just called its 7.5% cumulative preferred stock effective on 9/6/23. I owned 20 shares, spread out over 3 accounts including 1 Roth IRA. All of the shares were purchased at the $25 par value. 

I am pleased with receiving 7.5% and avoiding a loss on the shares. 

Current PLYM Position: None. I am not likely to buy back the shares unless that price sinks below $15. The proceeds will be redirected into purchases of WPC, see Item # 1.J. above, which has a higher dividend yield at current prices and is a better quality industrial REIT IMO. 

PLYM Realized Gain to Date: $429.57  (40 shares)

D. Eliminated Duplicate Position in PBA - Sold 14 at $31.14: 

Quotes: 

USD: Pembina Pipeline Corp. (PBA)

CADs: Pembina Pipeline Corp. (Canada: Toronto)

CAD / USD Currency Chart. Canadian Dollar to US Dollar Rates

Website: Pembina; Operations; Investor Relations 

PPL.TO - Pembina Pipeline Corp Profile | Reuters

PBA SEC Filings (foreign company forms)

Proceeds: $467.1

Profit Snapshot: +$246.88

Last Discussed: Item # 4.F. Pared PBA - Sold 3 at $37.9 (4/21/22 Post)(profit snapshot = $66.54)

Last Buy Discussion: Item # 2.A. Bought 20 PBA in Schwab Taxable Account at $30,16 (1/13/22 Post) 

Dividend: Quarterly at C$.6675 per share, last raised from C$.6525 effective for the 2023 second quarter. Dividend History 

Prior to 2023, the dividend was paid monthly. 

For U.S. citizens, Canada will withhold a 15% tax when the dividend is paid into a non-retirement account. I also own PBA in two Roth IRA accounts and no Canadian tax is withheld for dividends paid into those retirement accounts per the U.S. - Canada Tax Treaty.  

Dividend Yield: The yield will fluctuate based on the CAD/USD conversion rate. Based on the TTM USD dividends, the yield at my sales price is about 6.4%. An increase in the CAD's value against the USD results in a dividend increase even when there is no change in the dividend. Conversely, a decrease has the same effect as a dividend cut. 

Next Ex Dividend: 9/14/23

Remaining Taxable Account Position- Schwab Account: 20 shares with an average cost per share of $30.16.

I am keeping the higher cost position and plan to average down when a purchase will lower my average cost per share. 

Last Earnings Report (Q/E 6/30/23): Pembina Pipeline Corporation Reports Results for the Second Quarter 2023 and Declares Quarterly Common Share Dividend or SEC Filed Earnings Press Release for the Q/E 6/30/23 

All amounts are in CADs. 

Other Sell Discussions:  Item # 2.A. Eliminated PBA in Schwab Taxable-Sold 100 at $32.31 and Item # 2.B. Sold Shares Bought with  Dividends in Fidelity Taxable (5/14/21 Post))(profit snapshot = +$1,044.26 and $6.8); Item # 2 Sold 100 PBA at $38.69 (1/18/20)(profit snapshot = $435.78)= Item # 1 Bought 100 PBA at $34.34 (12/11/19 Post); Item # 5 Sold 100 PBA at 33.19 (10/3/13 Post)(profit snapshot = $383.72)-Item # 3 Bought 100 PBA at $29.22 (2/20/13 Post)

Other Substantive Buy Discussions: Item # 1. Bought 107 PBA-100 at $21.84; 5 at $20.89 and 2 at $20.66-Sold 7 at $23.18 (11/13/20 Post); Item # 2.E. Restarted PBA in Fidelity Taxable-Bought 10 at $15.72; 5 at $14.7; 1 at $13.3; 1 at $11.9 (5/9/20 Post)

PBA Realized Gains to Date: US$2,193.4

Preferred Stock Position: I own 400 shares of Pembina's reset equity preferred stock PPLPRC. This preferred stock will reset its coupon on  3/1/24 at a 2.6% spread to the 5 year Canadian government bond yield determined as of the 30th day prior to the first day of the reset period, unless redeemed at that time. The current coupon is 4.478% paid on a C$25 par value which indicates that the 5 year bond was then at 1.878% back in March 2019. Item # 2.B. Bought 100 PPLPRC at C$15.88 (3/7/20 Post); Item # 1. Bought 50 PPLPRC at C$15.8  (7/3/19 Post); Item # 1.B. Bought 50 PPLPRC at C$17.23 (5/25/19 Post); Item # 1.A. Bought 100 PPL.PR.C. at C$17.7 (3/23/19 Post); Item # 1.A. Added 100 PPLPRC at C$16.8 (6/24/23 Post) So far, I have realized C$1,003 in gains trading Pembina reset equity preferred stocks.  

3. Equity Preferred Stocks: 

A. Added 5 TCBIO at $17.95:

Quote: Texas Capital Bancshares Inc. 5.75% Preferred Series B Stock

Cost: $89.75

Issuer: Texas Capital Bancshares Inc. (TCBI) - A Bank Holding Company

TCBI SEC Filings

TCBI SEC Filed Earnings Press Release for the Q/E 6/30/23 (net income = $68.651M, net income available to common shareholders = $64.339M; the preferred shares have a preference right vs. the common stock to net income)

Prospectus

Par Value: $25

Dividends: Paid quarterly, non-cumulative and qualified. 

Maturity: None, potentially perpetual 

Issuer Optional Call: On or after 6/15/26 

New AC per share: $19.02

Yield at AC = 7.56% (.0575% coupon x. $25 par value = $1.4375 annual dividend per share ÷ $19.02 average cost per share = 7.5578%)

Last Ex Dividend: 8/31/23 (owned all as of)

Last Discussed: Item # 2.B. Added 5 TCBIO at $19.48; 5 at $19 (1/10/23 Post) 

B. Added 5 BWBBP at $16.85: 

Quote: Bridgewater Bancshares Inc.  5.875% Preferred Series A (BWBBP)     

Cost: $84.25 

Issuer: Bridgewater Bancshares Inc. (BWB) 

BWB Analyst Estimates | MarketWatch

BWB SEC Filings 

Prospectus (August 2021)

Par Value: $25

Coupon: 5.875% paid on the $25 par value

Average cost per share: $17.60 (17 shares)

Dividends: Paid Quarterly, Qualified and Non-Cumulative  

Yield at $17.6 AC = 8.35%

Last Ex Dividend: 8/14/23

Maturity: None, potentially perpetual 

Issuer Optional Redemption: At par + accrued and unpaid dividend on or after 8/17/26. I view an optional redemption as unlikely given the favorable coupon rate to the bank.   

Stopper Clause: Standard

Last Discussed: Item # 5.C. Bought 10 BWBBP at $18; 2 at $17.46 (8/5/23 Post) 

C. Eliminated Duplicate Position in AGROPRA - Sold 15 at $22.86: 

Quote: Argo Group International Holdings Ltd. Series A Non-Cumulative Preferred Stock

Proceeds: $342.83

Profit Snapshot: $47.58

Last Discussed: Item # 2.C. Added 5 AGROPRA at $19.05 (1/10/23 Post) 

The issuer is in the process of being acquired by Brookfield Reinsurance Ltd. (BNRE) The merger agreement provides that the preferred stock will become an obligation of the surviving company: 

Sourced: Page 22 of the Merger Agreement 

Brookfield Reinsurance to Acquire Argo in $1.1 Billion Transaction (2/8/23). Since Argo has been losing money every quarter, its acquisition by Brookfield Reinsurance is probably a credit positive. BNRE SEC Filed Earnings Press Release for the Q/E 6/30/23 The merger is expected to close in the second half, ARGO 10-Q for the Q/E 6/30/23 at page 37 Regulatory approval has not yet been received which is the only remaining item that has to be met. 

Prospectus

Par Value: $25

Placement Capital Structure: Equity Preferred Stock, senior only to common stock. 

Stopper Clause: Yes 

Optional Redemption: On or after 9/15/25  

Dividends: Paid Quarterly, Non-Cumulative and Qualified

Coupon: 7% to but excluding 9/15/25, then, if not called, resets for 5 years at a 6.712% spread to the 5 year treasury note. (see prospectus at pages S 7-8) If Brookfield completes the Argo acquisition, I would expect this preferred stock to be called on 9/15/25 

Last Ex Dividend: 8/30/23 (owned all as of)

D. Added 4 AGROPRA in Schwab account at $22.67:

See Item # 3.C. above

Cost: +$90.68

New AC per share: $24.48 (25 shares)

Yield at New AC: 7.15%

Last Ex Dividend: 8/30/23 (owned all as of) 

E. Bought 10 TFINP at $20 - Schwab Account: 

Cost $200

Quote Triumph Financial Inc. 7.125% Preferred Stock   (TFINP) 

Issuer: Triumph Financial Inc.  (TFIN) 

TFIN is more than just a bank holding company. 

TFIN SEC Filings 

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

10-Q for the Q/E 6/30/23 

Prospectus 

Par Value $25

Coupon: 7.125%

Yield at $20: 8.91%

Dividends: Paid quarterly, qualified and non-cumulative. 

Next Ex Dividend: 9/14/23

Maturity: None, potentially perpetual

Issuer Optional Call: On or after 6/30/25

Stopper Clause: Standard

The Stopper Clause enforces the preferred shareholders superior right to cash dividends compared to the common shareholder. For a non-cumulative preferred dividend, this means that the company must eliminate the cash common share dividend before eliminating the preferred dividend. 

4. Treasury Bills Purchased at Auction: $10,000 in principal amount of which $9,000 was sourced from the Schwab sweep account paying .45%. The amount of treasury bills purchased in my Schwab account depends on how much is received in redemption proceeds. I received $5,000 in proceeds last Thursday and Friday which were not credited to my account in time for a treasury bill purchase. I will redeploy $4K  into a 3 month T Bill purchase next Monday.

A. Bought 5 Treasury Bills at the 9/5/23 Auction: 

Matures on 12/7/23

91 Day Bill 

Interest: $67.18

Investment Rate: 5.477%

B. Bought 4 Treasury Bills at the 9/7/23 Auction: 

56 Day Bill

Matures on 11/7/23

Interest: $32.92

Investment Rate: 5.423%

C. Bought 1 Treasury Bill at the 9/5/23 Auction: 

Matures on 9/5/2024

1 Year Bill 

Interest: $51.77  

Investment Rate: 5.417%

5. Corporate Bonds: 

A. Bought 2 Willis North America 3.6% SU Maturing on 5/15/24 at a Total Cost of 98.3: 

Issuer: Wholly owned subsidiary of Willis Towers Watson PLC (WTW) who guarantees the notes. 

Prospectus Supplement

WTW  Analyst Estimates | MarketWatch

WTW SEC Filings 

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

10-Q for the Q/E 6/30/23 

2022 Annual Report (SU debt listed at page 101; this SU bond is the next one to mature with $640M in principal amount) 

New Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa3/BBB+

YTM at Total Cost = 6.148%

Current Yield at TC = 3.66%

I now own 6 bonds.  

Last Bond Offering (May 2023): Prospectus for 750M 5.35% SU maturing in 2033 (of the approximate $742M in net proceeds, $250M was going to be used to redeem the remaining 4.625% SU bonds maturing on 8/15/23, see Use of Proceeds section at page S-16) 

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.