AIO, AOD, BKH, BMY, BOHPRA, CNOBP, CODI, DGRO, DPG, EAI, GLQ, GLW, IDE, MRCC, PBA,PGX, SAR, SCCC, SBRA,TFINP, THQ, VTV

Economy: 

CPI for September increased by .4%. The consensus forecast was for .3%. The annual CPI through September was reported at 3.7%. Core CPI rose .3% month-to-month and at a 4.1% for the 12 month period, down from a 4.3% increase through August. CPI September 2023: Consumer prices rose 0.4%, more than expected  

Consumer Price Index Summary - 2023 M09 Results

Owners equivalent rent rose .6% month-to-month, up from .4% in July to August, and was reported as increasing at 7.1% over the past year. The weighting for this pretend expense is 25.613% in CPI. Table 2. Consumer Price Index for All Urban Consumers (CPI-U): U. S. city average, by detailed expenditure category - 2023 M09 Results I have owned my home since 1982 and have not yet paid rent to myself. Inflation in "owners equivalent rent" is not an expense that homeowners pay but generates more equity and potential profit.  

The Social Security COLA increase for 2024 will be 3.2%, down from 8.7% in 2023.  

Higher Bond Yields Likely to Extend Fed Rate Pause - WSJ The rise in intermediate and longer term rates to relatively high historical spreads to the inflation predictions made in the TIP breakeven inflation rates makes it less likely that the FED will increase the FF rate.  

For the week ending 10/12/23, the average 30 year mortgage rate was 7.57%. The average 15 year mortgage was at 6.89%. Mortgage Rates - Freddie Mac

Blue line: 30 Year; Green 15 Year 

The five year low rates were hit during the W/E 7/29/21 at 2.8% and 2.1%.  

China’s Country Garden Succumbs to Debt Crisis After Sales Plunge - WSJ As of June, Country Garden had about $187B in liabilities. 

Evergrande Investors Warn of ‘Uncontrollable Collapse’ - WSJ Evergrande is one of China's over-leveraged property developers that owed about $322B to suppliers, lenders and others as of June 2023.  

China’s promise of prosperity brought Laos debt — and distress - Washington Post There is no way that Laos can pay back the loans made by China whose meddling in Laos has brought that nation to brink of bankruptcy with a 41% annual inflation rate and a 43% depreciation in the Laotian currency against the USD. China uses massive loans to developing nations as a means to gain control and influence. It is a less direct method of absorption than its ally's ongoing efforts in Ukraine.   

Intermediate and longer term treasury yields went up after the CPI inflation report and down when investors become more concerned about the Middle East violence. So there was a daily push and pull between inflation and Middle East concerns. The spike in WTI crude oil prices, which may soon spike to over $100 per barrel, is tied to concerns about the Middle East. Gold is also benefiting.  

Treasury Yield Curve October 2023:

Real Yields: 

The Treasury will auction a 5 year TIP next Thursday. Note that the highest real yield in the previous snapshot is the 5 year. The 5 year TIP breakeven inflation rate closed yesterday at 2.26%. I am buying 1 in a RI account. 

10 Year TIP Breakeven inflation rates: 

10/2/23  2.35%

10/13/23 2.34%

The gyrations in the 10 year yield has nothing to do with changes in inflation expectations as forecasted in the breakeven inflation rate of the 10 year TIP.  

The more probable than not prediction is that the FED is done raising rates in 2023. CME FedWatch Tool - CME Group The odds of a 25 basis point hike at the 11/2/23 meeting is currently at less than 10%. 

+++

Allocation Shifts Discussed in this Post: 

Treasury Bills Purchased at Auction: $14,000 in principal amount

Corporate Bonds: $4,000 in principal amount

Common Stocks: +$1,000.46

(Consisting of $$1,357.59 in purchases  minus $357.13  in proceeds)

Weighted yield common stock purchases: 5.72%

Stock CEFs: +$412.46 (yield at 9.22%)

Stock ETFs: -$622.02

Realized Gains Stocks/Stock Funds: +$247.9

Net Inflow Stocks/Stock Funds:  +$790.9

2023 Net Outflow Stocks/Stock Funds: = -$37,475.07

++++

Trump and His Party: 

GOP leadership crisis deepens as House remains paralyzed with no end in sight to speaker's race Without a speaker or new authority given to the temporary one that replaced McCarthy, the House can not even vote on legislation. 

While "David Duke without the Baggage" Scalise barely beat Jim Jordan in an internal vote among republicans, Scalise could not garner the necessary 217 republican votes to become Speaker and consequently withdrew. 

The republicans then nominated Jordan to become Speaker. Jim Jordan wins House GOP's nomination for speaker, but deep divisions remain - CBS News 

55 House republicans reportedly voted against him in the conference vote. House Republicans in disarray as Jim Jordan hunts for enough votes to be speaker 

Jordan's supporters are are not bothered that Jordan was reportedly told by several persons that a team doctor at Ohio State was a molester and did not report what he knew to the authorities, or that Jordan was front and center in Trump's effort to cancel the certified vote totals in several states won by Biden.   

Six former wrestlers say Rep. Jim Jordan knew about abusive OSU doctor; Powerful GOP Rep. Jim Jordan accused of turning blind eye to sexual abuse as Ohio State wrestling coach; Jim Jordan denies allegations that he ignored sexual abuse of wrestlers at Ohio State - The Washington Post (or another case of a republican politician claiming to be truthful while everyone else is lying); Ohio State University abuse scandal - Wikipedia; Jim Jordan was deeply involved in the attempted coup to overturn the 2020 Election - Ohio Capital Journal; The 147 Republicans Who Voted to Overturn Election Results - The New York Times

The mere nomination of Jordan for Speaker will be a gift to the democrats in 2024, adding to the difficulty of republican incumbents winning in competitive districts.  

Perhaps representatives Marjorie Taylor Greene or Paul Gozar would arguably be less desirable choices for that job compared to Jordan, at least from the perspective of a true conservative or moderate. All are extremists, with belligerent personalities, and incapable of compromise or working with the Democrats on any issue. Jordan is a fanatical devotee of Trump who will be the republican nominee for President in 2024, even if he has to hold cabinet meetings in a prison cafeteria wearing a jumpsuit whose color matches his hair. 

It is uncertain whether the "governing" party in the House will be able to agree on a Speaker unless they cut a deal with the Democrats to nominate what is now viewed as a republican moderate. I doubt this alternative is feasible since any republican joining with the democrats to elect a republican Speaker would be viewed as a traitor and primaried in 2024. 

While McCarthy blames Democrats for his ouster, it is not like a single republican would have ever come to Nancy Pelosi's rescue if she had found herself in the same situation. 

The problem started with McCarthy making promises to the most extreme republicans in order to become speaker, which included a concession that 1 House member could initiate a vote to remove him as speaker, and then Matt Gaetz (R-FL) initiated that vote. If at least 10 representatives were required to initiate the process, McCarthy would still be Speaker.  

The inability of the Chaos Party to elect a Speaker increases the likelihood of a government shutdown due to this irresponsible dysfunction. 

Trump's turn against Israel offers stark reminder of what his diplomacy looks like Trump "criticized Israeli Prime Minister Benjamin Netanyahu, lauded Hezbollah militants as “very smart” and sought political gain from the attacks that killed 1,200 people by claiming that if the last election was not “rigged,” he’d be the American president and they’d never have happened." Trump criticized for calling Hezbollah 'very smart' as he talked of potential risk to Israel - ABC News (Trump: "You know, Hezbollah is very smart.' They're all very smart.")

Trump fraud trial could reveal how much he exaggerated property values - The Washington Post Another example occurred in 2018 when Donald was President. Trump's company claimed that it had consulted a seasoned real estate expert and obtained a $445M valuation on a retail store adjacent to Trump Tower that later closed. The expert told investigators that he did not have any input in that valuation and it made no sense. 

Former Trump Finance Chief in Testimony Says Penthouse, Assets Were Overvalued - WSJ

Trump Makes Horrifying Israel Attacks All About Himself - YouTube

Trump says Hamas attack on Israel, war in Ukraine would not have occurred if he were president | The Hill

Executing Gen. Milley has now become part of the Republican Party line: authoritarianism expert - Raw Story

Another case of republican race based gerrymandering is before the Supreme Court. 

Republicans in South Carolina moved 30,000 black voters out of a competitive house district currently occupied by Nancy Mace (R), a Trumpster who pretends to be a moderate, and moved them into a predominately black congressional district. 

A panel of three federal district court judges found that this action was constitutionally prohibited racial gerrymandering. Court to hear argument in racial gerrymandering challenge to S.C. district - SCOTUSblog; The new Supreme Court showdown over gerrymandering, explained-Vox 

Republican dominated state legislatures in Alabama and Tennessee have also engaged in race based gerrymandering in order to dilute black voting power. 

New charges accuse George Santos (R-NY) of identity theft, credit card fraud - The Washington Post The new criminal charges were filed a few days after the treasurer of the Santos campaign pled guilty to criminal charges. 

+++++

Putin and His Orc Empire of Misery:

The Russian Ambassador to the U.N., Vasily Nebenzia, claimed that Russia did not murder 55 civilians who were attending a wake in the small Ukrainian village of Hroza, repeating the oft told lie that Russia does not target civilians.

Nebenzia added that the funeral was for a high ranking Ukrainian Nationalist, attended by his Nazi buddies, and consequently implied that all of them deserved to die including the women and children. The youngest child murdered by the Russians was Ivan Kozyr who was 8. Hroza residents bury family after Russian missile strike hits funeral service - YouTube Nebenzia and all of his predecessors are just ridiculous people spouting a continuous stream of utter nonsense.  

Brothers accused of orchestrating deadly Russian strike on Ukrainian village – POLITICO The brothers had worked for Russian police during its illegal occupation of Kharkiv and have apparently received sanctuary in Russia as a reward for their actions. Possibly the psychopath Putin will give them a medal, heroes of the Motherland, and a pension for life. 

Both the denial of responsibility for massacring civilians attending the wake in Hroza and the claimed justification are of course false. 

What kind of nation would launch missiles at an apartment building, far from the front line of a warzone, and then attack the first responders who are trying to pull civilians including children out of the rubble. Russian "double-tap" strike kills at least 7 in Ukraine-YouTube Russia used the same tactic in Syria. Russia and Syria carried out dozens of illegal ‘double tap’ strikes, report finds - The Washington Post  

There Are No Rules - The Atlantic (column written by Anne Applebaum who notes that Russia has followed it war crime playbook from Syria in Ukraine, using "artillery, cruise missiles, and drones, including Iranian drones, to hit an even wider range of civilian targets: houses, apartment buildings, churches, restaurants, ports, grain silos.")

Ukraine has no choice but to expel Russian forces from its territory. In exchange for Ukraine giving up its nuclear weapons, Russia promised in the Budapest Memorandum, signed in 1994, "to refrain from the threat or use of force against the territorial integrity or political independence of Ukraine. The territory was clearly defined as the then "existing borders". 

The_Budapest_Memorandum.pdf 

Any promise made by Russia is worthless of course. Russia will take what is given in an agreement and then renege on its promises. It is never a question of whether Russia will violate its commitments but only when it will happen.

Ukrainians understand that giving Russia any Ukrainian territory in exchange for yet another promise from Russia will end up soon thereafter with Russia absorbing the entire country and Russifying it. 

Russia’s Economy Is Increasingly Structured Around Its War in Ukraine - The New York Times Russia's GDP has been boosted by a significant increase in defense spending. Spending money on bullets, artillery shells, tanks and other items that are used in Ukraine will add to Russia's GDP, which is still lower than South Korea, but adds nothing other than more debt long term. The article notes that Russia has also been so far reasonably successful in cushioning the impact of sanctions through more defense spending. Trade with China was up at a 32% annual rate in the first 8 months of 2023.

The next Presidential "election" in Russia is scheduled for next March. I am predicting that the Dictator for Life will win in a landslide.  

There are many similarities between Putin and the leaders of Hamas. One striking similarity is that the lives and well being of those who they govern are completely unimportant and irrelevant to them, notwithstanding their claims to the contrary.  

Zelensky accuses Putin of backing Hamas-The Times of Israel; After Hamas Massacre in Israel, Scale of Atrocities Grows - The New York Times; Kfar Aza kibbutz: Children, women, elderly 'butchered' in Hamas attacks on border communities-CNN; How Hamas Turned an Israeli Music Festival Into a Massacre | WSJ - YouTube 

I am not aware of any evidence that points to Russia's direct involvement in the planning and execution of the Hamas massacres directed at civilians. Russians murder Ukrainian civilians daily as part of their terror and genocide campaign.  

Russia's support for Hamas and its state sponsor Iran are well established. What Role Does Russia Have To Play In Hamas's Invasion Of Israel? Q&A With Expert Hanna Notte And, Putin did not condemn the atrocities committed by Hamas in Israel. Russia cites ‘concern’ but does not condemn Hamas attack on Israel - The Washington Post

The WSJ claimed that the authoritarian regime in Iran assisted Hamas in planning and carrying out its attack on Israeli civilians. Iran Helped Plot Attack on Israel Over Several Weeks-WSJ One reason given for Iran's involvement was to provoke an easily predictable Israeli response that would prevent the normalization of diplomatic relations between Israel and Saudi Arabia which may have been near completion prior to the Hamas atrocities.  

I am not aware of any smoking gun proving Iran's direct involvement but the Iranian government praised Hamas for murdering Israeli civilians. Iran praises Hamas as attack reverberates around Middle East-POLITICO U.S. Intelligence agencies claim they have not found any direct evidence. There is, however, only a very tiny step from praising the attacks, knowing what actually happened, to participating in their planning and execution. 

Hamas was planning its attacks in plain view for almost 2 years according to a CNN report, which highlights the overall Israeli intelligence failure. Hamas propaganda videos reveal stunning details leading up to attack on Israel | CNN

Damage to gas pipeline, telecom cable connecting Finland and Estonia caused by 'external activity' - ABC News; Nato vows to respond if Finland-Estonia gas pipeline damage is deliberate - YouTube  

It should come as no surprise to a Russian that Putin does not care at all about Russian soldiers who are generally poorly trained, clothed, fed and provisioned. 

The latest example of Putin sacrificing Russian soldiers without restraint is the ongoing Russian offensive to capture Avdiivka, a small city located in the eastern Donetsk region that had a prewar population of about 32,000. Russia has suffered very heavy losses in just the first two days, throwing newly mobilized and poorly trained units into a meat grinder. Ukraine resists large-scale Russian assault to encircle Avdiivka - YouTube; Ukrainian ambushes and mines decimate Russian forces during Russia's Avdiivka offensive ("Russians used so many tanks and armored fighting vehicles that they created a traffic jam on the local road", sound familiar!); The Russian Army Reportedly Lost 34 Tanks Trying To Cut Off Avdiivka 

Russian Offensive Campaign Assessment, October 11, 2023 | Institute for the Study of War

+++

1. Small Ball Buys - Common Stocks: 

A. Added to GIS - Bought 5 at $62.45: 

Quote: General Mills Inc. (GIS)

Cost: $312.25

GIS Analyst Estimates | MarketWatch

GIS SEC Filings

10-Q for the fiscal quarter ending 8/27/23 (first fiscal quarter)

General Mills: Brands overview

Last Bond Offering (10/12/23):  Prospectus for 5.5% SU maturing in 2028. The proceeds will be used to redeem $400M in floating rate notes maturing on 10/17/23 that currently pays 6.58% (see "Use of Proceeds" at page S-10)

General Mills, Inc. (GIS) Interactive Stock Chart - Yahoo Finance (Bear market trend starting in May 2023 after topping at $90+)

52 week price range: $60.33 - $90.89 

When buying a packaged food company stock, the negative impact on volume caused by price increases has been a major problem over the past year or so. Organic sales may increase on a quarterly basis but that is due to price increases offsetting volume declines.  

This relationship between price and volume is shown in the GIS earnings report for the first fiscal quarter: 

There are also now concerns about the increased usage of weight loss drugs on food purchases.   

Last Discussed: Item # 1.C. Eliminated GIS in Vanguard Taxable Account - Sold 2+ at $80.41 (3/6/23 Post)(profit snapshot = $66.83) 

Last Buy Discussions: Item 3.L. Added to GIS in Fidelity Account-Bought 1 at 58; 1 at $57.67 (8/20/21 Post); Item # 1.G. Added to GIS in Fidelity Taxable Account-Bought 5 at $55.9; 5 GIS at $55.5; 5 at $55.2; 5 at $54.9; 5 at $54.5; 5 at $54 (2/6/21 Post); Item # 1.A. and 1.B. Started GIS in Schwab Taxable account and Added to GIS in Fidelity Taxable Account (1/9/21 Post) The lowest price paid over the past 5 years was $36.75.  Item # 5 A. Bought 2 GIS at $40.25, 2 at $39.45, 10 at $38.3 and 5 at $36.75-Used Commission Free Trades (12/29/18 Post)

New average cost per share: $56.25 (50 shares)

This buy slightly raised my AC. 

Dividend: Quarterly at $.59 per share ($2.36 annually), last raised from $.54 effective for the 2023 third quarter payment. 

GIS Dividend History 

Yield at AC = 4.2%, rounded up. 

Last Ex Dividend: 10/6/23  (owned all as of)  

Last Earnings Report (Q/E 8/27/23): This is the first fiscal quarter. 

SEC Filed Earnings Press Release 

Revenues at $4.9B, up 4%

GAAP E.P.S. $1.14 

Non-GAAP E.P.S. $1.09, down 1% in constant currency, "driven primarily by higher net interest expense and a higher adjusted effective tax rate, partially offset by higher adjusted operating profit and lower net shares outstanding."

GAAP to Non-GAAP Reconciliation:  

Fiscal 2024 Outlook: Adjusted E.P.S. expected to increase 4% to 6% in constant currency.

Other Sell Discussions: Item # 3.C. Pared GIS in Fidelity Taxable Account - Sold 5 at $86.64 (12/13/22 Post)(profit snapshot = $145.71); Item # 6.A. Pared GIS - Sold 5 at $81.64 (11/8/22 Post)(profit snapshot = $118.72); Item # 4.B. Pared GIS in Fidelity Taxable Account - Sold 5 at $80.65 (9/27/22 Post)(profit snapshot = $112.89); Item # 2.B. Sold 2+ GIS at $67.1 and 3 at $69.22 (1/7/22 Post)(profit snapshots = $46.67); Item # 3.B. Sold 1.582 GIS at $64.42 - Eliminated Shares Bought with Dividends (6/4/21 Post)(profit snapshot = $8.09); Item # 1.A. Pared GIS in Fidelity Taxable-Sold 4 at $61.37 (4/17/21 Post)(profit snapshot = $9.95); Item # 1.A. Eliminated GIS-Sold 27+ at $54.86 (3/21/20 Post)(profit snapshot = $426.37); Item # 1.A. Sold 13 GIS at $55.02-Used Commission Free Trade (8/17/19 Post)(profit = $134.13); Item 1.B. Sold Highest Cost GIS lots at $51.69 (4/7/2019 Post); Item #2.A. Sold 10 GIS at $56.18-Used Commission Free Trade  (12/21/17 Post) Snapshots of 2007 through 2017 round-trip trades can be found in Item 1.B (+$1,809.99). The largest single gain was $1,285.51 realized on a 52 share lot in 2016. There have not yet been any realized losses.    

GIS Realized Gains 2007 to Date: $2,863.51

Trading Strategy: I will generally have a GIS position. I am not likely now to go over 100 shares and will consider selling some lots in the $70 - $85 price range. I am not likely to buy shares at over $65. My next purchase will be 5 shares below $60.  

Last SU Bond Purchase: Item # 1.H. Bought 2 General Mills 4% SU Maturing on 4/17/25 at a Total Cost of 97.35 (10/25/22 Post)

B. Added to SAR - Bought 5 at $24; 5 at $23.5:

Quote: Saratoga Investment Corp. - Externally Managed BDC

Cost: $237.5

SEC Filings

SEC Filed Annual Report for the F/Y ending 2/28/23 (Risk factor summary starts at page 27 and ends at page 59)

Last Discussed: Item # 1.G. Bought 5 SAR at $24.4 (10/7/23 Post) 

New Average cost per share: $25.01 (30 shares)

Dividend: Quarterly at $.71 per share ($2.84 annually) 

SAR Dividend History | Seeking Alpha

Yield at New AC = 11.36%, rounded up

Last Ex Dividend: 9/13/23

Net Asset Value per share history: 

8/31/23:  $28.44

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 (Q/E 8/31/23): This report is for the second fiscal quarter.  

SEC Filed Press Release

Net Investment Income per share: $1.15

Adjusted NII Per share: $1.08, adjustment is for the accrual of an incentive fee

10-Q (summary terms of investments starts at page 5)

85.7% first lien loans

In Thousands, page 38 10-Q

Company estimated net investment income impact from changes in interest rates: 

Page 140, 10-Q

This kind of estimate does not take into account loans going into default. Just on a change in interest rate, net income goes up as interest rates increase which is the case for BDCs that have a high concentration in floating rate loans as SAR does. 

10-Q for the Q/E 6/30/23 Summary of investments starts at page 5. An investment with a (k) next to the name indicates that the loan is on nonaccrual. I noticed two loans on nonaccrual. The first is a $15.878+M loan to Knowland Group, a software company providing services to hotels, that had been marked down to $9.754M. Event Intelligence & Hospitality Sales Solutions | Knowland The other borrower is Pepper Palace, a retailer who sells sauces, who borrowed $33.2M that has been marked down to a $7.94+M "fair value" as of 6/30/23. The value was claimed at $24.41+M as of 2/28/23 but the loan was not then on nonaccrual. 

As previously discussed, I do not like SAR relying on high coupon SU exchange traded debt. I do have a small position in one of the baby bonds. Saratoga Investment Corp. 8.5% Notes due 2028 Stock Quote (SAZ) 

C. Added to MRCC - Bought 5 at $7.17: 

Quote: Monroe Capital Corp. (MRCC) - Externally Managed BDC

Cost: $33.85

MRCC SEC Filings

10-Q for the Q/E 6/30/23 (summary of investments starts at page 7)

2022 Annual Report (Risk factor summary starts at page 35 and ends at page 67)

Last Discussed: Item # 1.C. Added to MRCC - Bought 5 at $7.3(8/26/23 Post) I discussed the last earnings report in that post. SEC Filed Press Release 

Net Asset Value Per Share History: The risk is highlighted by the decline in NAV per share. 

6/30/23:   $ 9.84

3/31/23:   $10.29

12/31/22:  $10.39

12/31/21:  $11.51 

12/31/20   $11

12/31/19:  $12.2 

12/31/18:  $12.66

12/31/17:  $13.77

12/31/16:  $14.52

12/31/15:  $14.19

12/31/14:  $14.05

12/31/13:  $13.92

Public Offering Price: $15 per share, proceeds to MRCC at $14.72, Monroe Capital Corporation The external manager paid $.59 per share of the underwriter's discount. 

Discount to 6/30/23 Net Asset Value per share at $7.57:  -23.07%

Given the net asset value per history, and the percentage rate of decline, a 23% discount to the last reported net asset value per share does not provide much of a cushion.  

New average cost per share: $7.57 (30 Shares)

Dividend: Quarterly at $.25 per share

Monroe Capital (MRCC) Dividend History | Seeking Alpha

Yield at New AC  = 13.21%

(regular dividend only, and assumes continuation of the current penny rate which is not an assumption that I would make)

Last Ex Dividend: 9/14/23 (owned 25 shares as of)

Purchase Restriction: 5 to 10 share lots with each subsequent purchase required to be at the lowest price in the chain. 

Maximum Position: 100 shares. I view this small BDC as riskier than the average BDC and its net asset value history adds to my trepidation.   

D. Restarted BKH - Bought 2 at $47.91:

History this Account:  

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

"Based in Rapid City, South Dakota, the company serves 1.33 million natural gas and electric utility customers in eight states: Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming."

The operating electric utilities are Colorado Electric, South Dakota Electric and Wyoming Electric. There are six operating gas utilities owned by the holding company.

Cost: $95.82

BKH Analyst Estimates | MarketWatch

BKH SEC Filings

10-Q for the Q/E 6/30/23 

2022 Annual Report 

Owned Electric Generation as of 12/31/22: 

The oil fired generation will generally be used for peak demand periods, since they can be quickly started and shut down. 

The base load coal units have small nameplate capacities and consequently lack the economies of scale and lower cost per MW of average sized units. Ten economic facts about electricity and the clean energy transition | Brookings (average nameplate capacity is 402MW) The electric utilities owned by BKH are too small to own larger and more efficient coal generation facilities. 

Wind generation facilities is a good option for this utility given its service territories. Coal supplies are close by which cuts down on transportation costs to the generating units.     

Last Discussed: Item # 2.H. Eliminated BKH in Fidelity Account - Sold 5+ at $70.55  (4/7/22 Post)(profit snapshot = $61.22) 

Most Recent Bond Offering (9/23): Prospectus for $450M of a 6.15% SU maturing in 2034. The proceeds will be used to redeem a $525M 4.25% SU note that matures in 11/23. I currently own 5 Black Hills 3.95% SU bonds that mature on 1/15/26. Bond Page | FINRA.org

Average cost per share: $47.91 (2 shares)

Dividend: Quarterly at $.625 per share ($2.5 annually), last raised from $.595 effective for the 2022 4th quarter payment. 

BKH Dividend History | Seeking Alpha

Yield at AC: 5.22%, rounded up. 

Last Ex Dividend: 8/17/23

Last Earnings Report (Q/E 6/30/23): SEC Filed Press Release 

Earnings will be seasonal with the winter months generating the most income. 

E.P.S. = $.35 for the Q/E 6/30/23 and $2.06 for the six months

2023 Guidance: E.P.S. between $3.65 to $3.85

Taking the midpoint of that range and my $47.91 average cost per share, the P/E is 12.78. 

E. Added to BMY - Bought 1 $$57.67; 1 at 56.79; 1 at $56.01:

Quote: Bristol Myers Squibb Co.

Cost: $170.47

BMY SEC Filings

BMY Analyst Estimates | MarketWatch

Last Substantive Discussion: Item # 1.E. Added to BMY - Bought 1 at $59.82; 1 at $59.41 (9/16/23 Post); Bristol Myers Squibb Reports Second Quarter Financial Results for 2023 I discussed the last earnings report in that post as well as the problems faced by the company. The most serious one is the loss of patent exclusivity for Revlimid. 

New average cost per share: $59.71  (21+ shares)

Dividend: Quarterly at $.57 per share ($2.28 annually)

Dividend History - Bristol Myers Squibb

Yield at New AC  = 3.82%, rounded up. 

Last Ex Dividend: 10/5/23

Subsequent to these purchases, BMY entered into an agreement to acquire Mirati Therapeutics (MRTX) for $58 per share. Bristol Myers Squibb - Bristol Myers Squibb Strengthens and Diversifies Oncology Portfolio With Acquisition of Mirati Therapeutics 

In addition, Mirati shareholders "will also receive one non-tradeable Contingent Value Right (CVR) for each Mirati share held, potentially worth $12.00 per share in cash" 

Mirati has one FDA approved lung cancer drug called Krazati (adagrasib) and several drugs in clinical trials. Pipeline | Mirati Therapeutics, Inc. Several of those trials involve other indications for Krazati. 

Krazati was approved by the FDA in December 2022. Mirati Therapeutics Inc. - Mirati Therapeutics Announces U.S. FDA Accelerated Approval of KRAZATI™ (adagrasib) as a Targeted Treatment Option for Patients with Locally Advanced or Metastatic Non-Small Cell Lung Cancer (NSCLC) with a KRASG12C Mutation

In the 2023 second quarter, the recently launched Krazati generated $13.4M in revenues. MRTX SEC Filed Earnings Press Release The MRTX next loss for the quarter was $176.9M. As of 6/30/23, Mirati had no debt and $779.434 in cash and short term investments. Mirati has several license and collaboration agreements with other companies that are described at pages 15-18 in the 10-Q for the Q/E 6/30/23. 

I do not have an opinion on whether the revenues and profits from Mirati's drug portfolio will end up justifying the purchase price and the CVR payments, if any.  

To have a chance to recover the cash purchase price and any cash outlays under the CVR, I suspect that  more indications for Krazati will need FDA approval and several trials are underway. The other compounds are in early Phase 1 trials. So it is speculative at this point whether BMY will generate enough profits from Mirati drugs to cover the cash outlays and even more speculative whether an acceptable return can be generated from those outlays. 

Last Eliminations: Item # 1.A. Eliminated BMY in Fidelty Account - Sold 14 at $74.64 (2/13/23 Post)(profit snapshot = $206.75); Item # 2. Eliminated BMY in Vanguard Taxable Account - Sold 15+ at $77.56 (5/5/22 Post)(profit snapshot = $279.11) 

Trading Strategy: I am buying back the 14 shares sold earlier this year at $74.64. Each purchase will have to be at the lowest price in that chain.  

F. Added to GLW - Bought 1 at $30.11; 1 at $29.79; 1 at $29.54; 1 at $28.7; 2 at $27.98:  

Quote: Corning Inc.  (GLW)

Cost: $174.1

GLW Analyst Estimates | MarketWatch

GLW Profile: Reuters

GLW Key Metrics-Reuters

GLW SEC Filings

2022 Annual Report

10-Q for the Q/E 6/30/23 

Last Discussed: Item # 1.A. Restarted GLW - Bought 5 at $31.41; 2 at $31 (6/3/23 Post) I discussed the 2023 first quarter report in that post. SEC Filing 

New average cost per share: $30.24 (13 shares)

Dividend: Quarterly at $.28 per share ($1.12 annually), last raised from $.27 effective for the 2023 first quarter payment. 

Corning-Dividends

Yield at New AC: 3.7%

Next Ex Dividend: 11/16/23

Last Earnings Report (Q/E 6/30/23): 

SEC Filed Press Release 

Revenues: $3.243B, up 2% sequentially but down 10% Y-O-Y. 

Revenue by Business Sector: 

GAAP E.P.S. = $.33

Non-GAAP E.P.S. = $.45

Consensus Non-GAAP at $.46 per Schwab

Reconciliation GAAP to Non-GAAP: 

Free Cash Flow: $310M

Guidance for the 3rd quarter: "core sales of approximately $3.5 billion and core EPS to be about the same or slightly better than in the second quarter."

Analyst Reports (available to Schwab customers): 

Morningstar (7/25/23): 4 stars with a fair value estimate of $39 (reduced from $40), narrow moat. 

S&P (7/28/23): 4 stars with a 12 month PT of $40

Argus (7/25/23): Buy with a 12 month PT of $54. 

Purchase Restrictions: Maximum 100 share position, increasing odd lot buys to 2 shares between $27 to $28 and 5 shares below $27.  Each subsequent purchase must lower my average cost per share and preferably be at the lowest price in the chain. 

G. Added to PBA - Bought 2 at $28.5: 

Quotes: 

USD: Pembina Pipeline Corp. (PBA)

CADs: Pembina Pipeline Corp. (Canada: Toronto)

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

Cost: $57

Website: Pembina; Operations; Investor Relations

PPL.TO - Pembina Pipeline Corp Profile | Reuters

PBA SEC Filings (Foreign company forms)

New average cost per share: US$30.1 (22 shares)

Dividend: Quarterly at C$.6675 per share($2.67 annually)

Yield: The dividend is paid in CADs and converted to USDs for owners of PBA. Since the conversion rate will vary from quarter to quarter, it is impossible to calculate in advance a dividend yield. If I assumed a constant CAD/USD of .73, the yield at a US$30.1 per share, the yield would be about 6.475% before factoring in taxes.  (C$2.67 annual dividend per share x .73 CAD/USD conversion rate = US$1.9491 annual dividend per share ÷ US$30.1 per share total cost = 6.4754%)

Last Discussed: Item # 2.D. Eliminated Duplicate Position In PBA - Sold 14 at $31.14 (9/9/23 Post)(profit snapshot = $246.88) I discussed the last earnings report in that post. SEC Filed Earnings Press Release for the Q/E 6/30/23

Some 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) 

Some Other Sell Discussions: Item # 4.F. Pared PBA - Sold 3 at $37.9 (4/21/22 Post)(profit snapshot = $66.54); 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)

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.  

H. Bought 10 CODI at $18.45; 5 at $18.22:

Quote: Compass Diversified Holdings (CODI) 

Cost: $276.6

CODI Analyst Estimates | MarketWatch (As of 10/13, the 2023 consensus E.P.S. estimate is $1.82, down from $2.21 in 2022, and $2.13 for 2024) 

CODI SEC Filings 

10-Q for the Q/E 6/30/23 Debt is discussed starting at page 26 and listed at page 28. The good news is that $1.3B of the $1.757+B in debt consists of a 5.25% and 5% SU bonds that mature in 2029 and 2032 respectively. The bad news is that the remaining debt is variable, priced at spreads to SOFR, and is more expensive. CODI also relies on preferred stock for capital and has 3 publicly traded preferred stocks outstanding. I have recently discussed buying CODIPRA which has a 7.25% coupon paid on a $25 par value.  Item # 6.A Added to CODIPRA - Bought 4 at $21.88 (10/7/23 Post). 

In February 2023, CODI completed the sale of its Advanced Circuits business, receiving approximately $170.9M and recorded a gain of $102.2M, "net of an income tax provision of $4.6M and used $66.9M to repay loans. 10-Q at at page 16 

CODI owns a variety of operating businesses that are managed separately and are described in the 10-Q at pages 19-20. 

Second Quarter Revenue by Segment: 

In Thousands, p.21, 10-Q

Ownership Interest by segment: 

Page 39, 10-Q

Externally Managed: Page 45

Average cost per share: $18.37 (15 shares)

Dividend: Quarterly at $.25 per share 

Yield at $18.37 = 5.44%

Next Ex Dividend: 10/18/23

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

SEC Filed Earnings Press Release 

Several factors have resulted in lower earnings compared to 2022 second quarter: (1) the sale of Advanced Circuits in February; (2) higher interest expenses; (3) a 5.8M increase in the non-cash amortization expense and (4) a significant increase in the selling, general and administrative expense category as explained at page 44. 

Adjusted earnings: $35.571M

Weighted Average Diluted Shares: 71.932M

Non-GAAP E.P.S. = $.4945

Consensus at $.39 per Schwab

Reconciliation GAAP to Non-GAAP: 

2. Small Ball Buys - Stock CEFs: 

A. Added to AOD - Bought 10 at $7.33: 

Quote: abrdn Total Dynamic Dividend Fund Overview - Stock CEF

Cost $73.3

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

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

Leveraged: Yes, lightly at close to 5% using preferred stock. 

Average cost per share: $7.95 (111+ shares)

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

I am reinvesting the dividend. 

Some ROC support. 

Yield at New AC : 8.68%

Last Ex Dividend: 9/21/23

Last Discussed: Item # 1.D. Bought 10 AOD at $8.05 (9/9/23 Post) 

Data Date of 10/4/23 Trade: 

Closing Net Asset Value per share: $8.62

Closing market price: $7.35

Discount: -14.73%

Average 3 Year Discount: -11.54%

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

B Bought 5 THQ at $16.86: 

Quote: Tekla Healthcare Opportunities Fund Overview - Leverage Balanced CEF

Cost: $84.3

Leverage of close to 22% is at a spread to SOFR. 

Investment Category: Monthly Income Generation

This fund owns primarily common stocks and bonds issued by healthcare companies. The fund will own some convertible preferred stocks and will write some options against common stock positions. The use of borrowed money to buy securities that have gone down in price as the cost of borrowing has risen is not helpful to performance. 

Recent performance has  been poor due mostly to the rise in interest rates causing declines in the preferred stocks, healthcare REIT common shares, and bond positions owned by the fund.   

SEC Filed Semiannual Report for the period ending 3/31/23

SEC Filing- Holdings as of 6/30/23

THQ SEC Filings

Tekla Healthcare Opportunities (THQ)-Morningstar (rated at 4 stars)

Tekla Healthcare Opportunities (THQ) Portfolio | Morningstar (lists top 25 holdings)

Last Discussed: Item # 1.F. Added to THQ - Bought 5 at $17.85 (9/23/23 Post) 

New average cost per share this account: $18.59 (45+ shares)

Dividend: Monthly at $.1125 ($1.35 annually). 

I am reinvesting the dividend in this account. 

Some ROC support. The only way to cover this dividend with income is through realization of short and long term capital gains. 

Yield at AC  = 7.26%

Last Ex Dividend: 9/20/23

THQ Dividend History | Seeking Alpha

Data Date of 10/2/23 Purchase: 

Closing Net Asset Value per share: $20.05

Closing Market Price: $16.83

Discount: -16.06%

Sourced: THQ  - CEF Connect

Average 3 year discount: -6.74%

Some Sell Discussions: Item # 1.H. Pared THQ in Fidelity Account - Sold 10 at $17.55 and 10 at $17.9 - Highest Cost Lots (5/23/20 Post)(profit snapshot = $23.34); Item # 1.B. Sold Remaining THQ-61+ Shares at $17.5 (9/1/19 Post)(profit snapshot = $60.49); Item # 2.A. Sold 53 THQ at $17.98(7/31/19 Post)(profit snapshot = $44.81); Item # 5 Sold 100 THQ at $17.59-Used Commission Free Trade(7/7/19 Post)(profit snapshot = $79.88 and contains 2017 profit snapshots =$555.56); Item # 2.C. Sold  232+ THQ at 17.59 (7/3/17 Post); Item # 2.D. Sold 118+ THQ at $18.7 in a Roth IRA Account (7/3/17 Post;); Item # 3. Sold 160+ THQ at $17.41 (6/5/17 Post)

THQ Realized Gains to Date: $822.13

C. Added to GLQ - Bought 5 at $5.35: 

Quote: Clough Global Equity Fund Overview - Leveraged Balanced CEF that sells some common stocks short. 

Cost: $26.75

Investment Category: Monthly Income Generation

GLQ SEC Filings

SEC Filed Semiannual Report for the period ending 4/30/23 

SEC Filing - Holdings as of  7/31/23 

Last Discussed: Item # 3.E. Bought 5 GLQ at $5.96 (5/6/23 Post) 

New average cost per share: $7.19 (76+ shares)

Dividend: Monthly at $.0599 per share ($.7188 annually)

GLQ Dividend History | Seeking Alpha

ROC supported. 

Yield at AC = 10%

Next Ex Dividend: 10/19/23

Data Date of 10/4/23 Trade: 

Closing Net Asset Value per share: $6.59

Closing Market Price: $5.38

Discount: -18.36%

Average 3 year discount: -7.24%

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

D. Added to IDE - Bought 5 at $8.9: 

Quote: Voya Infrastructure, Industrials & Materials Fund Overview - A Buy-Write Stock CEF

Cost: $44.5

Last Discussed: Item # 2.B. Added 5 IDE at $9.31 (6/10/23 Post) 

IDE SEC Filings

SEC Filing - Portfolio as of 5/31/23 

Sponsor's website: Voya Infrastructure, Industrials and Materials Fund

IDE Morningstar

IDE Portfolio | Morningstar

New Average cost per share:  $9.53  (35 shares) 

Dividend: Quarterly at $.229 per share ($.916 annually)

Some ROC support. The only way to cover that dividend is with capital gains. Dividends will cover management fees and expenses and provide partial support for the dividend.  

2022 Dividend Classifications: 

As shown in that table, $.4474 of the the total dividend paid in 2022 was classified as return of capital ("ROC"). The part of the dividend classified as ROC is not treated as taxable dividend income, but will reduce the tax cost basis by the amount so classified. That reduction in the tax cost basis will generate a larger capital gain or lower capital loss, compared to no adjustments for ROC, when the shares with the adjusted cost basis are sold. In that sense, the ROC classification is a tax deferral with the timing of the tax recognition dependent on when the investors decides to sell the shares with the adjusted tax cost basis.  

Yield at New AC = 9.61%

Last Ex Dividend = 10/2/23  

Data Date of 10/4/23 Trade: 

Closing Net Asset Value per share: $10.63

Closing Market Price: $8.89

Discount: -16.37%

Average 3 Year Discount: -10.77%

Sourced: IDE-CEF Connect (Click Pricing Information tab) 

IDE Realized Gains to Date: $621.55

Largest Gains: Item # 2 Sold 100 of the Stock CEF IDE at $20.3 (3/11/11 Post)(profit snapshot = $227.25); Item # 5 Sold 100 IDE at $17.47 (3/24/2014 Post)(profit snapshot = $138.39) 

Last Elimination: Item # 3. Eliminated IDE - Sold 100 at $13.85 (1/29/2017 Post)(profit snapshot = $46.96)

Some Other Sell Discussions: Item # 1 Sold 50 IDE at $18.7 (9/30/10 Post)(profit snapshot = $49.08); Item # 2 Sold 50 of the Stock CEF IDE at $18.61 (5/10/12 Post)(profit snapshot = $55.58); Item # 3 Sold 50 IDE at $17.12 Roth IRA (7/6/13 Post)(profit snapshot = $34.48).

E. Added to AIO - Bought 3 at $16.37: 

Quote: Virtus Artificial Intelligence & Technology Opportunities Fund Overview - A Leveraged Balanced CEF

Cost: $49.11

Leverage: About 17%

Last Discussed: Item # 5.B. Bought 5 AIO at $15.7 (10/25/22 Post) 

Investment category: Monthly Income Generation

AIO SEC Filings

Virtus Artificial Intelligence & Technology Opportunities Fund (SEC Filed Semiannual Report for the period ending 7/31/23; AIO holding information starts at page 19)

AIO Portfolio | Morningstar

New average cost per share: $17.22 (60+ shares) 

Dividend: Monthly at $.15 per share ($1.8 annually)

AIO Dividend History | Seeking Alpha

There was a $3.45 per share capital gain distribution in January 2022. 

Yield at $17.22 = 10.45%

Last Ex Dividend: 10/11/23 (owned all as of) 

Data Date of 10/3/23 Trade: 

Closing Net Asset Value per share: $18.34

Closing Market Price: $16.32

Discount: -11.01%

Average 3 year discount: -9.34%

Sourced: AIO  - CEF Connect 

F. Added to DPG - Bought 5 at $7.99: 

Quote: Duff & Phelps Utility & Infrastructure Fund Inc. (DPG) -  A Leveraged Stock ETF

Cost: $39.95

DPG SEC Filings

SEC Filed Semiannual Report for the Period Ending 4/30/23

Duff & Phelps Utility and Infrastructure Fund Inc. - Sponsor's website. 

Portfolio by Sector:

All of these bond like common stock sectors have been hit hard by the rise in interest rates.  

Last Discussed: Item # 1.B. Added to DPG - Bought 5 at $9.13 (9/16/23 Post) 

New Average cost per share: $9.11 per share (20+ shares)

Dividend: Quarterly at $.21 per share ($.84 annually)

DPG Dividend History | Seeking Alpha

Yield at AC = 9.22%

Last Ex Dividend: 9/14/23

Data Day of 10/4/23 Purchase: 

Closing Net Asset Value per share: $9.41

Closing Market Price: $8.03

Discount: -14.67%

Average 3 Year Premium: +1.63% (as previously discussed, individual investors irrationally priced DPG shares for several years)

Sourced: DPG - CEF Connect 

Last Elimination: Item # 1. Eliminated DPG in Schwab Account - Sold 390+ at $14.57 (6/14/21 Post)

G. Added to GDV - Bought 5 at $18.9:

Quote: Gabelli Dividend & Income Trust Overview - Leveraged Stock CEF 

Cost: $94.5

Sponsor's website GDV 

SEC Filed Semiannual Report for the period ending 6/30/23

Gabelli Dividend & Income (GDV) Portfolio-Morningstar

Top 10 Holdings: 

Investment Category: Monthly Income Generation 

Last purchase Discussion: Item # 1.B. Bought 5 GDV at $20.4 (9/23/23 Post) 

New Average cost per share: $20.02 (25+ shares) 

Dividend: Monthly at $.11 per share ($1.32 annually)

GDV Dividend History | Seeking Alpha

Yield at New AC = 6.59%

Next Ex Dividend:  10/16/23

Data Date of 10/5/23 Purchase: 

Closing Net Asset Value per share: $22.98

Closing Market Price: $18.97

Discount: -17.89%

Average 3 Year Discount: 12.49%

Sourced: GDV - CEF Connect 

Gabelli Dividend & Income (GDV)-Morningstar (1 star rating)

Last Sell Discussion: Item # 1. Sold 200 GDV at $21.03 (11/12/13 Post)(profit snapshot = $1,393.8)

3. Small Ball Sells: 

A. Eliminated DGRO - Sold 10 at $48.61: 

Quote: iShares Core Dividend Growth ETF Overview

Proceeds: $486.11

Sponsor's website: iShares Core Dividend Growth ETF | DGRO

Expense Ratio: .08%

Top 10 Holdings as of 10/4/23: 

DGRO – Performance – iShares Core Dividend Growth ETF | Morningstar

Profit Snapshot:  $186.31 (10/3/23 sale only)

Last Discussed: Item # 1.B. Sold 2 DGRA at $49.72 (5/27/23 Post)(profit snapshot = $36) 

Last Buy Discussion: Item # 2.B. Restarted DGRO - Bought 1 at $32; 1 at $31.86; 1 at $31.43; 1 at $30.58; 1 at $29.9; 1 at $29.3; 1 at $28.8; 1 at $27.9; 1 at $27.7 (5/2/2020 Post)

Last 4 Dividends: $1.27, rounded down 

Last Ex Dividend: 9/26/23

Yield at $48.61 using $1.27 annual: 2.61%

One problem with dividend growth ETFs is that they will own low yielding stocks who have been increasing their dividends. Examples in the top ten list include Apple and Microsoft. The MSFT is currently below 1% with a P/E close to 34. Microsoft Corp. (MSFT) The Apple dividend yield is close to .5% with a P/E near 30. Apple Inc. (AAPL) 

DGRO YTD Total Return: +.67%

QQQ YTD Total Return: +37.78%

QQQ – Performance – Invesco QQQ Trust | Morningstar

Investors have lost interest in dividend paying stocks this year which I would attribute to the risk free return in treasury bills and other credit risk free short term fixed income investments. 

B. Eliminated Duplicate Position in VTV  - Sold 1 at $135.91: 

Quote: Vanguard Value ETF Overview

Sponsor's website: VTV - Vanguard Value ETF

Expense Ratio: .04%

Holdings: 342

I am keeping the 6 shares owned in my Fidelity account. The average cost per share is $100.88.  

Profit Snapshot: $35

Last Discussed: Item # 2.H. Pared VTV - Sold 1 at $142.31 (9/17/21 Post) 

Last Buy Discussion: Item # 4.M. Started VTV-Bought 10 shares in 1 share lots (8/29/20 Post)(average cost at $102.89)

Top 10 Holdings as of 8/31/23: 

Dividends: Paid quarterly at a variable rate. 

Last Ex Dividend: 9/21/23

VTV – Vanguard Value ETF – ETF Stock Quote | Morningstar (rated 4 stars)

C. Eliminated 1 of 2 Duplicate Positions in SBRA - Sold 25 at $14.29: 

Quote: Sabra Healthcare REIT Inc. (SBRA) - Primarily a Nursing Home and Senior Living REIT

For a long time, I viewed nursing homes to be the riskiest property sector, but office REITs now occupy that top spot IMO. 

Proceeds: $357.13

Profit Snapshot: +$26.59

SBRA SEC Filings

Last Discussed: Item # 1.L. Added to SBRA - Bought 1 at $11.28 (5/13/23 Post) 

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Dividend: Quarterly at $.30 per share

SBRA Dividend History | Seeking Alpha

Last Ex Dividend: 8/16/23 (owned all as of)

Last Earnings Report (Q/E 6/30/23): 

SEC Filed Press Release and Supplemental 

Revenues: $161.166M

AFFO per share: $.33

Normalized AFFO per share: $.34  

Net Income to AFFO calculations: 

Occupancy: 

P. 5, Supplemental 

Given the run rate for AFFO per share, the debt levels (p.16, Supplemental), the use of variable rate debt and rising interest rate costs, it would not be prudent IMO to raise the dividend. 

Goal: Any total return before return of capital ("ROC") adjustments to the tax cost basis in excess of the dividends. Including the profit created by ROC adjustments and the dividends in a total return calculation results in double counting that portion of the dividends classified as ROC. Most of the shares sold were bought in 2022 and 2023. Most, but not all of the profit was created by ROC adjustments to the tax cost basis. 

Tax Treatment of 2022 Dividends: 

The ROC classification terminology used in this snapshot is "Non-Dividend Distributions".

Sabra Health Care REIT, Inc. Announces Tax Treatment of 2022 Distributions | Business Wire

4. Corporate Bonds: $4,000 in principal amount

A. Bought 2 Capital One 4.2% SU Maturing on 10/29/25 at a Total Cost of 95.299: 

Issuer: Capital One Financial Corp. (COF) 

I have never owned the common shares. 

COF Analyst Estimates | MarketWatch

COF SEC Filings 

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

New Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa1/BBB-

YTM at Total Cost: 6.674%

Current Yield at TC = 4.41%

B. Bought 2 FF KKR Capital 4.125% SU Maturing on 2/1/25 at a Total Cost of 96.385: 

Issuer: FS KKR Capital Corp. - Externally Managed BDC 

FSK SEC Filings

Last Earnings Report: SEC Filed Press Release

I own the common shares. 

Last FSK Discussion: Item # 4. Eliminated 1 of 3 FSK Duplicate Positions - Sold 12 at $20.35 (9/16/23 Post) 

FSK SEC Filings 

New Finra Page: Bond Page | FINRA.org

Prospectus (Risk factor summary starts at page S-9,

Credit Rating: Baa3

YTM at Total Cost: 7.06%

Current Yield at TC = 4.28%

5. U.S. Equity Preferred Stocks- Preferred Stock ETF: 

A. Added to BOHPRA - Bought 5 at $13.52: 

Quote: BOH-PA

Cost: $67.6

Issuer: Bank of Hawaii Corp. (BOH) - A Bank Holding Company

BOH Analyst Estimates | MarketWatch

BOH SEC Filings

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

BOHPRA Prospectus

Last Discussed: Item # 3.B. Bought 5 BOHPRA at $14.78 (9/13/23 Post) 

Par Value: $25

Coupon: 4.375%

Dividends: Paid quarterly, qualified and non-cumulative

Average cost per share = $14.15 (10 shares)

Yield at $14.15: 7.73%

Next Ex Dividend: 10/16/23

Stopper Clause: Standard.  

Purchase Restriction: Each subsequent purchase, if any, will be a 5 share lot with each lot required to be at the lowest price in the chain.  

B. Added to PGX - Bought 5 at $10.58: 

Quote:  PGX | Invesco Preferred ETF Overview

Cost: $52.9

Sponsor's website: Invesco Preferred ETF

Expense ratio: .5%

Holdings

Investment Category: Monthly Income Generation 

Last Discussed: Item # 4.B. Added to PGX - Bought 5 at $11.3 (8/5/23 Post) 

New average cost per share: $11.55 (25 shares)

I am averaging down in small lots when the purchase reduces my average cost per share. 

Dividends: Paid monthly at a variable rate. 

PGX Dividend History | Seeking Alpha

Last Ex Dividend:  9/18/23

Morningstar: Invesco Preferred ETF (PGX) - Morningstar

Sell Discussions: Item # 5 Sold: 200 PGX at $14.38 (11/12/2010); Item # 3.A. Eliminated PGX - Sold 100 at $14.51 (8/1/2020); Item # 1.A Sold 50 PGX at $14.35 (3/3/19 Post)

Equity preferred stocks had been in a downtrend due to a rise in intermediate term interest rates.  

I would anticipate that preferred stock prices will continue to decline provided intermediate term treasury yields remain in an uptrend. 

When investors become convinced that the current dominant uptrend has been replaced by a persistent decline in yields, then I would expect preferred stocks to go up in price as a group, though there will always be exceptions, provided the stock market is not in turmoil with serious spikes in volatility.  

Many bank holding preferred stocks were hit after the bank failures earlier this year. Preferred stocks issued by bank holding companies will become worthless, or very close to a zero value, when the FDIC seizes the operating bank. So the downside is a wipeout. 

While there have been some recovery off the price lows, some credit concerns are still reflected in many bank preferred stocks.  

Office REIT preferred stocks have been negatively impacted by credit concerns. 

C. Added to TFINP - Bought 2 at $18.88: 

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

Cost: $37.76

Issuer: Triumph Financial Inc.  (TFIN)

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

TFIN SEC Filings

Last Discussed: Item # 1.D. Added 5 TFINP at $19.16 (9/30/23 Post) 

New Average cost per share:  $19.62 (17 shares)

Yield at AC = 9.08%

Last Ex Dividend: 9/14/23 (owned 10 as of) 

Prospectus

Par Value: $25

Coupon: 7.125%

Dividends: Paid quarterly, qualified and non-cumulative. 

D. Added 5 CNOBP at $16.25: 

Quote: ConnectOne Bancorp Inc. 5.25% Preferred Series A  (CNOBP)

Cost: $81.25

Fixed-to-Floating Rate Equity Preferred Stock

Issuer:  ConnectOne Bancorp Inc. (CNOB) - A Bank Holding Company

CNOB SEC Filings

CNOB SEC Filed Earnings Report for the Q/E 6/30/23

Last Discussed: Item # 5.B. Bought 10 CNOBP at $16.95 (8/5/23 Post) 

CNOBP Prospectus 

Par Value: $25

Fixed Coupon: 5.25% to and excluding 9/1/2026

Floating Rate: From and including 9/1/2026 at the 5 year treasury rate + 4.42% This reset date is too far into the future for me to assign a current value. At a 4% five year treasury yield on the 2026 reset date, the coupon would be 8.82% and the yield at my total cost would become 13.19%.  

Reset Period: 5 years. Once the coupon resets, it stays in effect for 5 years, but the issuer has the option to call at anytime.  

Dividends: Paid Quarterly, Qualified, and Non-Cumulative

New Average cost per share: $16.72 (15 shares) 

Yield at AC (using current fixed coupon): 7.85%

Last Ex Dividend: 8/14/23 (owned 10 as of)

6. Treasury Bills Purchased at Auction: 

A. Bought 2 Treasury Bills at the 10/10/23 Auction: 

91 Day Bill

Matures on 1/11/24

Interest: $27

Investment Rate: 5.503%

B. Bought 12 Treasury Bills at the 10/12/23 Auction: 

56 Day Bill

Matures on 12/12/23.

Interest = $99.77

Investment Rate: 5.48%

7. Exchange Traded Bonds Baby Bonds: 

A. Added to EAI in Schwab Account - Bought 5 at $20.62; 5 at $20.36: 

Quote: Entergy Arkansas 1st Mortgage Bonds 4.875% due 2066 (EAI)

I will own EAI in multiple accounts. My maximum total exposure in all accounts is 300 shares.  

Entergy Arkansas is a wholly owned operating subsidiary of Entergy Corp. (ETR).

Last Discussed: Item # 6.B. Added 5 EAI at $21.88 - Fidelity Taxable Account (6/24/23 Post) 

This first mortgage baby bond will continue declining in price for as long as long term treasury yields continue moving up. The decline in price over the past year or so has nothing to with credit risk IMO and has been entirely caused by the rise in interest rates. I suspect, but do not know of course, that long term treasury rates are near a peak, at least for the current interest rate cycle. 

Prospectus

First mortgage lien on substantially all assets 

Par Value: $25

Maturity: 9/1/66

Issuer Optional Redemption: At par value + accrued and unpaid interest on or after 9/1/2021. 

When interest rates were declining, I had several First Mortgage bonds called early by Entergy operating companies. I do not expect this one to be called until there is a sufficient decline in long term interest rates that would entice Entergy Mississippi to offer lower coupon bonds and to use the proceeds to pay off this one. 

New Average cost per share this account: $21.73 (50 shares)

Yield at $21.73: 5.61%

Next Ex Interest: 11/29/23

B. Bought 10 Sachem Capital 7.75% SU Bond Maturing on 9/30/25 at $23.84:  

Quote: Sachem Capital Corp. 7.75% Notes due 2025  (SCCC) 

Issuer: Sachem Capital Corp. (SACH) 

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

10-Q for the Q/E 6/30/23 (A listing of unsecured notes can be found at page 21. Two exchange traded SU notes, with an outstanding principal amount of $58.163M, mature in 2024. The trading symbols for those notes are SACC and SCCB) 

I view this mortgage REIT as high risk. Sachem has other exchange traded bonds outstanding that have longer maturities. I view credit risk as increasing as the maturity date lengthens, based on the theory that more time to maturity means that what can go wrong will more likely go wrong. 

Prospectus 

Coupon: 7.5%

Trades Flat. 

Current Yield at $23.84: 7.86%, rounded down. 

Next Ex Interest Date: 12/14/23

The YTM, which assumes the bond will be paid off at maturity, would be higher given the $1.16 per share profit realized at maturity. My rough calculation of the YTM is 10.35%. The YTM is juiced some by the relatively short maturity. 

Placement in Capital Structure: Senior unsecured bond. 

Par Value: $25

Matures on 9/30/25

Optional Call: At par value + accrued and unpaid interest 0n or after 9/4/22.

I am at my maximum exposure given my opinion regarding the balance between the high risk and total return potential assuming the note is paid off at maturity.   

8. Cash Flow into Fidelity Account - 10/16/23: 

In my bond ladder, I have several maturities every week that will usually involve more than 1 taxable account. In my Schwab account last week, I had  $10,000 in treasury bills mature and a $2,000 CD. Those proceeds were used to buy the $12K in the 2 month Treasury bill discussed above.   

Corporate Bond Maturities: $5,000

Interest (I) and Dividends (D): 

Corporate Bonds:  $299 (I)

CD:  $7.07 (I)

Common Stocks: $552.17  (D)

Equity Preferred Stocks: $44.06 (D)

CEFs: $15.56 (D)

Total: $917.86

The corporate bonds that paid less than $10 come from 1 or 2 bond lots that pay monthly. 

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.