Economy:
It is well understood that the U.S. economy is dependent on consumer spending.
Shares of gross domestic product: Personal consumption expenditures - St. Louis Fed
So I pay a lot of attention to data relating to retail sales, personal consumption expenditures and consumer credit card delinquencies.
I am seeing some weakness in discretionary large ticket purchases and increases in credit card delinquencies that have not yet reached a troublesome level IMO.
Overall, I would describe current consumer spending as supportive of GDP growth.
I have previously discussed a number of factors why that may continue, including annual wage increases exceeding annual CPI, more income from risk free investments, and locking in very low home mortgage rates long term that have increased disposable income after debt service payments.
Credit Card Delinquencies Continue to Rise—Who Is Missing Payments? - Liberty Street Economics (part of the Federal Reserve Bank of New York):
"Delinquency rates on most credit product types have been rising from historic lows since the middle of 2021. The transition rate into delinquency remains below the pre-pandemic level for mortgages, which comprise the largest share of household debt, but auto loan and credit card delinquencies have surpassed pre-pandemic levels and continue to rise. While the growth in auto loan delinquency has appeared to moderate over recent quarters, credit card delinquency rates have risen at a sharper pace. Even though the increase in delinquency appears to be broad based across income groups and regions, it is disproportionately driven by Millennials, those with auto or student loans, and those with relatively higher credit card balances."
Relatively high credit card balances are defined in the article as more than $20,000, "but the prevalence of balances this large is low at 6 percent of credit card holders. Meanwhile, borrowers with balances of less than $5,000, 68 percent of credit card borrowers last quarter, have recent delinquency transition rates similar to their pre-pandemic levels."
Delinquency Rate on Credit Card Loans, All Commercial Banks -St. Louis Fed
I do not view the current delinquency rates as signaling a significant slowdown in consumer spending. There is some financial distress building up among low income households and those who are already heavily indebted with high credit card balances and mortgage debt.
Existing Home sales fell to a 13-year low in October as prices rose
However: Mortgage demand jumps to six-week high as interest rates continue to drop (11/22/23)
The Fed should 'start talking' about lowering rates, says Wharton's Jeremy Siegel
Best Buy (BBY) earnings Q3 2024 There was a slight cut in BBY's 2023 annual sales estimate. The new estimate is $43.1B to $43.7B, down from the prior forecast of $43.8B to $44.5B.
Lowes has a similar warnings on sales. Lowe's (LOW) earnings Q3 2023
I do not own any retail stocks. I do own a few REIT stocks that lease to retailers {e.g. Realty Income Corp. Stock Quote (O) and NNN REIT Inc. (NNN)}
November Treasury Yield Curve:
November Real Yield Curve - TIPs
10 Year TIP Breakeven Inflation Rate as of 11/24/23: 2.26%
(computed by subtracting the real yield from the nominal yield, represents the annual average CPI over the next 10 years for the 10 year TIP to breakeven with the nominal 10 year; viewed by many as the market's annual average CPI forecast)
10 Year TIP Breakeven Inflation Rate as of 12/30/22: 2.3%
The rise in the ten year treasury nominal yield over the past year is not based on a change in inflation expectations over the next ten years but on yield normalization defined as normal historical spreads to anticipated inflation.
Starting in 2008 and extending into 2022, the FED, not the market, fixed nominal yields at abnormally low historical levels through ZIRP and QE monetary policies. The result was a long period when real yields were negative based on actual inflation numbers, particularly at the short end of the curve.
Once ZIRP and QE were abandoned in 2022, the market once again started to price intermediate and longer term nominal yields based on normal historical spreads to anticipated inflation rates. A 4.25%-4.5% ten year treasury yield based on the current inflation expectations is a normal historical rate. The FED determined intermediate and longer term rates were the historical aberrations totally unmoored from inflation and inflation expectations.
+++
Allocation Shifts Discussed in this Post:
Treasury Bills Purchased at Auction: $9,000 in principal Amount
Corporate Bonds: $6,000 in principal amount
Common Stocks +$214.84
(consisting of $651.94 in purchases minus $437.1 in proceeds)
Stock CEF: +$103.25
Net Inflow Common Stocks/Stock Funds: = +$318.09
Exchange Traded First Mortgage Bond (EAI): +$213.59 (yield = 5.71%)
U.S. REIT Equity Preferred Stock: +$86.84 (yield at 9.36%)
2023 Net Outflow Common Stocks/Stock Funds: -$30,428.72
++++
Putin and His Orwellian Empire of Misery:
Losses ∙ Russia ∙ WarSpotting — documented material losses in Russo-Ukrainian war
Russia says co-existence not possible with Ukraine's current 'regime' - The Jerusalem Post Russia Ambassador-at-Large Rodion Miroshnik: "The current regime is absolutely toxic, we do not see any options for co-existence with it at the moment."
The toxicity is solely on the Russian side.
Ukraine has no choice but to expel Russia from its internationally recognized boundaries. Otherwise, the entire country will be absorbed into the Russian Federation and Russified. No promise made by the Russian government to respect the territorial integrity and independence of Ukraine will be kept.
Russia will snuff out freedom in any territory under its control.
Jamala: Russia adds Eurovision-winning Ukrainian singer to wanted list
Holodomor: Parliament recognises Soviet starvation of Ukrainians as genocide-European Parliament
The long history of Russia's efforts to subjugate Ukraine - CBS News
Russia launches biggest drone attack against Kyiv since start of war, Ukrainian officials say Russia targeted residential buildings. As one would expect, Russia routinely targets apartment buildings and other civilian structures with missiles and drones and then routinely denies that it targets civilians and civilian buildings.
++++
Demagogue Don, His Party and Media Apparatchiks:
RealClearPolitics - Election 2024 - 2024 Republican Presidential Nomination (Trump has a 46.3% lead over his nearest challenger)
RealClearPolitics - Election 2024 - General Election: Trump vs. Biden (Using the average of all polls, Trump is leading Biden by 2.3%)
Trump ‘insurrectionist ban’ ruling: Takeaways from the blockbuster decision After hearing testimony from several witnesses and receiving other evidence, a Colorado Judge found that Trump did in fact incite an insurrection with the specific intent to disrupt the certification of Biden's election through unlawful means:
 |
| Page 90 |
11/17/2023 Final Order.pdf The order contains detailed findings of fact supporting the foregoing conclusion. The Court's conclusion is supported by the evidence. The Trumpster response to this ruling is to ignore it or to claim that the judge is biased or hates Trump. What is never done by them is to present rebuttal evidence that the findings of fact are inaccurate in some material way.
The Judge also concluded that Trump could not be kept off the ballot in 2024 even though he engaged in an attempted insurrection, because it was unclear that section 3 of the 14th Amendment applied to a President whose title is not specifically mentioned in that section. Colorado judge finds Trump engaged in insurrection, but keeps him on ballot-NPR
It would be bad policy for a court to remove Trump's name from the 2024 election ballot. For some reason contradicted by actual history, republicans believe that the Republican Supreme Court Justices interpret the constitution as written, which is not the case. Both sides construct constitutional interpretations that are policy decisions made by the majority based on ideology and/or religious beliefs. I discuss some examples here: 6/8/22 Post (scroll to Due Process Clause of the 14th Amendment)
In this case, the correct policy decision is to keep Trump on the ballot even if he did engage in an insurrection, and using the non-reference to the President in Section 3 as the constitutional justification.
If Trump lost after having his name removed from or or more state ballots, there would be widespread violence, irrespective of whether the removal was legally justified. CO judge's 'bizarro' Trump eligibility ruling ripped apart by constitutional law experts - Raw Story I would not call the ruling "bizarro" simply because the Court found that Trump had in fact engaged in an attempted insurrection and nonetheless refused to remove him from the ballot.
David Axelrod believes that Biden has no better than a 50% chance of beating Trump in 2024. Obama's top campaign guru David Axelrod believes Biden chances in 2024 ‘no better’ than a 50-50
If the American voters want to elect a lying, mean spirited, ignorant authoritarian demagogue who suffers from a variety of serious mental illnesses and has no redeeming positive personality traits, then they should be allowed to do so.
I am not looking forward to 2024.
Video: Trump takes stage to "J6 hostages" song that "beat Taylor Swift" Trump claimed this song, recorded by men in jail facing charges from the January 6th U.S. Capital attack, went to Number 1 on the Itunes singles chart. The song is a rendition of the Star Spangled Banner with Trump comments interspersed.
Trump: "I call them J6 hostages. Not prisoners. I call them the hostages . . When that came out, it went to the number one song. It was beating everybody. It beat Taylor Swift, it beat Miley Cyrus . . . It was up there for a long time. It was a number one record or song, it was for months" Fact Check: Did Donald Trump Beat Taylor Swift In Pop Charts? (#1 between 3/12/23 - 3/15) In Trump's America, those who stormed the Capital on 1/6 are patriots, and those who are currently in jail are "hostages".
In TrumpWorld, anyone who criticizes Trump, using facts, is suffering from Trump Derangement Syndrome and are, in Trump's words, "vermin".
Trump's words are and have been reminiscent of Joseph Goebbels and other Nazis. I gave some recent examples just from this month in my last post. The parallel with Goebbels goes way back to Trump's claims about the "lying press" which translates from Lügenpresse in German, a phrase used by Nazis in their rise to power. Trump, Propaganda and the Destruction of the Free Press (10/26/17, U.S. News and World Report article) Similar phrases used by Trump include "Fake News" and referring to the media organizations that he disfavors as "Enemies of the People". The purpose of these attacks is to cause people to distrust any factual reporting that contradicts false statements and narratives advanced by Trump and his supporters.
Tucker Carlson spreads antisemitic message in interview with Candace Owens
DERANGED Trump Gives AWFUL Speech in TINY High School Gym - YouTube The crowd applauded his nonsense.
‘Pizzagate’: Elon Musk is now boosting the years-old conspiracy theory
Senator Tommy Tuberville (R-AL) questions Pentagon on 'abortion after birth' - YouTube
The Dear Leader of the GOP told the RNC to end the debates among Republican candidates or face a revamping:
Trump wishes "psycho" judge, "racist" attorney general a happy Thanksgiving; Trump Posts Deranged Thanksgiving Message to ‘Lunatics, Fascists and RINOs’; Trump posts 'Thanksgiving message' at 2 AM with a list of insults - YouTube
Donald never matured into an adult.
U.S. court strikes down key path for enforcing voting rights-NPR; The Decision That Could End Voting Rights - The Atlantic; Eighth Circuit ruling limits enforcement of Voting Rights Act-Courthouse News Service The decision comes from the 8th Circuit Court of Appeals in an opinion written by the Trump appointed judge David Stras who once clerked for Justice Thomas. All of the judges on the panel were republicans.
The House Speaker Mike Johnson released all of the video taken during the republican insurrection on January 6th. Republican House members demanded that release so they could find proof that the violence was caused, not by Trump supporters, but by FBI informants.
Several republicans, including Senator Ted Cruz (R-TX), Senator Mike Lee (R-UT) and Marjorie Taylor Greene (R-GA) claimed to have found proof of this republican created conspiracy theory, pointing out a clip of someone dressed in Trump garb and allegedly flashing a badge in his hand. The person was not a police officer but Kevin Lyons who was convicted and sentenced to prison. He was not flashing a badge but a vape. Marjorie Taylor Greene and Mike Lee get Jan. 6 footage -but trying to blame the FBI could backfire; Sen. Mike Lee promotes a debunked conspiracy theory about a Jan. 6 rioter
Trump ripped 'so-called Christian' evangelicals as 'pieces of s--t': book
Donald Trump's Ex-Wife: Trump Kept Book of Hitler's Speeches by Bed;
“Well, Hitler did a lot of good things,” Trump told John Kelly according to Michael Bender’ Frankly, We Did Win This Election.
Vulgarities, insults, baseless attacks: Trump backers follow his lead - The Washington Post
+++++
1. Small Ball Buys:
Through 11/17/23, Goldman Sachs calculated that the YTD return of 7 S&P 500 stocks was +71%. Those seven stocks are AAPL, AMZN, GOOG/GOOGL, META, NVDA and TSLA. The remaining 493 components were up 6%.
This kind of outperformance by a few stocks will generally result in excessive valuations as portfolio managers crowd more and more into those stocks.
When performance is measured against an index, and only a few stocks are leading the index higher, it is understandable that portfolio managers will continue buying and holding them. Otherwise, it would be impossible for the portfolio managers to even come close to matching the benchmark index performance.
The end result is a price parabola for those stocks, increasingly unmoored from valuation, that will eventually collapse upon itself. A trigger event, for a valuation reset is usually a slowdown in revenue and earnings growth. When the thundering herd decides to reduce their positions in response, the door for escape anywhere near the then current price closes fairly quickly.
A. Added to BCBC - Bought 10 at $8.94:
Quote: Barings BDC Inc. (BBDC) - Externally Managed BDC
Cost $89.4
2022 Annual Report (Risk factor summary starts at page 36 and ends at page 70)
Management: External
Last Discussed: Item # 3.A. Added 40 BBDC at $7,75 (7/15/23 Post)
New Average cost per share: $8.57 (110 shares)
Dividend: Quarterly at $.26 per share ($1.04 annually), last raised from $.25 effective for the 2023 second quarter payment.
Yield at New AC = 12.14%
Next Ex Dividend: 12/5/23
Last Earnings Report (Q/E 9/30/23): SEC Filed Press Release
Net Investment Income ("NII") per share: $.31
Net Realized Loss per share: $.16 (not netted with NII)
Elizabeth Murray-Earnings Call Transcript: "The $.16 per share realized loss was predominantly due to the exit of our investments in Carlson Travel and the restructuring of Learfield Communications, which were partially reclassified from unrealized depreciation".
Net asset value per share: $11.25, down from $11.34 as of 6/30/23
10-Q for the Q/E 9/30/23 (summary of investments starts at page 9, debt discussed starting at page 98)
Impact of Interest Rate Changes on NII:
 |
| Page 140 |
 |
| Page 118 |
2022 Annual Report (Risk factor summary starts at page 36 and ends at page 70)
External Management Fees: I do not discuss fees paid to the external managers here.
This information is discussed in SEC filings, which I reference, including the Annual Reports.
The base management fee is paid on gross assets, including assets bought with borrowed money. This structure incentivizes the external management company to issue more shares and to incur more debt using the proceeds to acquire more assets.
An incentive fee may also be paid based on some threshold performance. The incentive fee is dividend into two categories. The first is based on a percentage of NII over a threshold amount. This incentivizes an external management company IMO to buy higher yielding and risky investments. The other category is based on netting capital losses and gains. While the netting is favorable to share owners, the failure to a net realized capital loss number with NII in the threshold computation is not.
Overall, I view fees paid to BDC external managers as ranging from excessive, the best case, to worse than worthless.
B. Restarted KW - Bought 10 at $11.57; 5 at $11.3:
Quote: Kennedy-Wilson Holdings Inc.
Cost $172.2
52 Week Range: $10.68 to 18.9 (intraday high of $18.9 hit on 3/6/23)
KW Stock Historical Prices & Data The price has been drifting down in response to higher interest rates and unfavorable investor opinions about commercial real estate in general.
KW is not organized as a REIT. I would classify KW as a hybrid real estate company that owns real estate (entirely or through JVs), makes loans secured by real estate, and receives fees for managing, acquiring and disposing of real estate.
KW "owns, operates, and invests in real estate and real estate-related assets (including loans secured by real estate) both on its own and through its investment management platform. . . . The Company's operations are defined by
Company Overview: 10-Q at page 42
Website: Home | Kennedy Wilson
 |
| Summary: List of Individual Properties follows |
Debt is discussed starting at page 22. Needless to say, I am uncomfortable with the amounts.
As of 9/30/23, there was $2.8212B in mortgage debt and $1.9289B in unsecured debt.
Except for $145.7M borrowed under a credit facility, the remaining debt consists of notes maturing in 2029, 2030 and 2031.
The notes "accrue interest at a rate of
The 4.75% 2029 and the 5% 2031 notes were originally issued in February 2021 ($500M each). 2020 Annual Report at page 57 KW sold $200M more in March 2021 in March 2021 at a premium to par value. SEC Filing; Prospectus The 4.75% 2030 note was in the original principal amount of $600M and was sold in August 2021, Prospectus
I am giving KW an "A" on interest rate risk management based on locking in relatively low rates in 2021.
There is also debt outstanding that is owed by an affiliate called Kennedy Wilson Europe Real Estate Limited, see page 25.
2022 Annual Report (Risk summary starts at page 14 and ends page 30; debt is discussed at page 49)
Last Discussed: Item # 2.G. Eliminated KW - Sold 10 at $18.68 (3/11/23 Post)(profit snapshot = $58.67)
Average cost per share: $11.48 (15 shares)
Dividend: Quarterly at $.24 per share ($.96 annually), last raised from $.22 effective for the 2022 first quarter payment.
Dividend Information | Kennedy Wilson
Yield at $11.48: 8.36%
Last Ex Dividend: 9/28/23
Last Earnings Report (Q/E 9/30/23): SEC Filed Press Release
GAAP loss of $.66 per share
These quote sum up the problems:
"With high levels of inflation, interest rates at multi-decade highs and rising geopolitical issues, the global investment environment continues to face headwinds. These factors have impacted our results due to non-cash mark-to-market adjustments in our fair value portfolio for assets which are generally being held as long term investments in well capitalized joint ventures with institutional partners and are currently producing excellent net operating income"
"Changes in the fair-value of the Company's co-investment portfolio and resulting adjustment to its net accrued performance allocation resulted in a non-cash $74 million net unrealized loss in Q3-23 (vs. a non-cash net unrealized loss of $7 million in Q3-22"
Other items of note:
"Realized gains on sale from real estate, net of non-controlling interest, totaled $14 million in Q3-23 (vs $49 million of realized gains from the sale of real and realized performance allocation from Q3-22)"
"KW's share of recurring property NOI, loan income and fees totaled $131 million in Q3-23 (vs. $130 million in Q3-22)."
KW continued to see "strong demand for rental housing and further growth in our debt investment platform and our Fee-Bearing Capital. We also remain on track to complete and lease-up several development projects in the near term, including approximately 1,000 multifamily units delivered in Q3 and over 1,300 units expected to complete by the end of Q2-24, which will continue to convert non-income producing investments into cash flowing assets."
Cash and cash equivalents: $331M
After the close of the quarter, KW sold an office building in the U.K. for $46M realizing a gain of about $13M.
Weighted average interest rate of KW Debt: 4.3% per annum
Weighted average debt maturity: 5.4 years
Other news since last discussion:
Kennedy Wilson Acquires First Tranche of $5.7 Billion Loan Portfolio From Pacific Western Bank (6/9/23)
There is a 4.75% preferred stock outstanding that was privately placed and bought by the Canadian company Fairfax Financial. Kennedy Wilson Announces $300 Million Perpetual Preferred Equity Investment From Fairfax Financial (2/3/22) Fairfax also acquired 7 year warrants with an initial strike price of $23 per KW share which look unlikely to be exercised.
C. Restarted PEO - Bought 5 at $20.65:
 |
| Includes Snapshot of Last Elimination (182+ shares) |
Quote: Adams Natural Resources Fund Inc. Overview (PEO)
Cost: $103.25
Sponsor's Website: Adams Funds
Top 10 Holdings as of 9/30/23:
This stock CEF was formed shortly before the October 1929 crash and was called Petroleum and Resources before changing its name to Adams Natural Resources. PEO shares office space and some personnel with Adams Diversified Equity Fund Inc. (ADX), formed at the same time. ADX owned 2,186,774 PEO shares as of 9/30/23. ADX SEC Filed Shareholder Report
I bought this lot shortly after PEO went ex dividend for its year end 2023 dividend which was $1.05 per share.
Last Discussed: Item # 1. Eliminated PEO - Sold 182+ at $22 (1/16/23 Post)(profit snapshot = $853.25) I got rid of some higher cost shares with this elimination that were netted out in my summary profit snapshot. By restarting the position, each subsequent purchase will have to be at the lowest price in the chain, so the $20.65 price will be my highest cost shares. I took the year end 2022 dividend of $242.76 in cash.
SEC Filed Semiannual Report for the period ending 6/30/23
PEO will disclose its portfolio changes on a quarterly basis. This is the summary for the semiannual period ending on 6/30/23:
This is the summary for the quarter ending 9/30/23:
The fund will primarily own energy, chemical and steel companies but there will be positions in other sectors and companies that have some tangential relation to "resources" like aggregates/cement (e.g. Vulcan Materials) and the containers and packaging sector (e.g. IP, PKG)
SEC Filed 2023 Third Quarter Report (lists holdings as of 9/30/23)
Data Date of 11/20/23 Trade:
Closing Net Asset Value per share: $24.63
Closing Market Price: $20.64
Discount: -16.2%
Average 3 year discount: -14.54%
Sourced: PEO - CEF Connect
Dividends: For the first three quarters, PEO will pay a $.10 per share dividend. The 4th quarter will include the remaining ordinary income and any long term capital gains. The 2023 4th quarter dividend consisted of $.65 per share in long term capital gains and $.40 of ordinary income. The ordinary income may be sourced from short term capital gains in addition to dividend income.
3/31/23: $18.04
12/31/22: $18.33
6/30/22: $18.53
12/31/21: $19.93
12/31/20: $20.16
9/30/20: $20.14 10-Q
12/31/19: $21.44
12/31/18: $21.75
12/31/17: $21.81
12/31/16: $21.74
12/31/15: $20.79
12/31/14: $22.05
12/31/13: $22.50
12/31/12: $22.70
12/31/11: $22.02
Initial Public Offering: Prospectus February 2010, priced to the public at $18.5 and at $17.205 to the underwriters
Goal: Any total return before ROC adjustments to the tax cost basis in excess of the dividend payments.
 |
| Page 33, 10-Q |
Using the midpoint of the FFO 2023 guidance of $1.16 per share, and the $4.03 stock price, the P/FFO is only 3.47. This indicates that investors are IMO ignoring the FFO number provided by BDN when pricing the stock.
BDN Realized Gains to Date: $440.52
SU Bond Ownership: I own 4 Brandywine Operating 4.1% SU bonds that mature on 10/1/24. Bond Page | FINRA.org The notes are guaranteed by BDN. Assuming I receive the proceeds at maturity, which I currently expect, I will consider at some point buying 2 of the 7.55% SU bonds.
 |
| 10-Q at page 17 |
Last Earnings Report (Q/E 9/30/23) SEC Filing
NII per share: $.53, up from $.43
Net Asset value per share: $10.41
Undistributed spillover income per share: $1.23
"Annualized portfolio yield on debt investments of 17.1% for the quarter"
"Held portfolio of warrant and equity positions in 99 companies as of September 30, 2023"
Company assessment of credit quality:
Quote: Gladstone Commercial Corp. (GOOD) - Primarily a Net Lease REIT
Proceeds: $196.1
Management: External
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
2022 Annual Report (Risk factor summary starts at page 16 and ends at page 31)
Website: Gladstone Commercial Corporation
Remaining Position: 50 shares in my Fidelity account with an adjusted tax cost basis, through 2022, of $10.62. For dividends paid in 2023, the amount of ROC will be reported in early 2024.
Last Discussed: Item # 3.B. Eliminated GOOD in Schwab Account - Sold 26+ at $13.33 (7/22/23 Post)(profit snapshot = $128.61) In that post, I discussed how the external management company has been richly compensated for poor performance that has resulted in a deteriorating share price.
The goal for GOOD is any total return in excess of the dividend prior to any ROC adjustment to the tax cost basis. I know that the total return will be acceptable to me with any profit given the dividend yield. To avoid double counting in a total return calculation, the original cost basis has to be used.
All of the shares were bought in March 2020 at a total cost of $176.73.
Average cost per share before ROC Adjustments: $11.05
Proceeds at $12.26 = $196.1
Profit before ROC Adjustments to the Tax Cost Basis: +$19.37
Adjusted Tax Basis = $130.22
(further adjustments likely for dividends paid in 2023)
Profit Snapshot with ROC Adjustments through 2022: +$65.88
Dividend: Monthly at $.10 per share, cut from $.1254 effective for the January 2023 payment, see SEC Filing. One cause was the amount of variable rate debt priced at spreads to SOFR. As interest rate costs rose, FFO is reduced and consequently there is less cash flow support for the dividend.
Dividend History-Gladstone Commercial Corporation (GOOD)
Dividend Yield at Original Cost Using the Reduced Payout: 10.86% (13.62%, prior to the January 2023 dividend cut)
I prefer owning a preferred stock issued by GOOD whose dividend can not be cut, but only deferred after the cash common share dividend is eliminated. Gladstone Commercial Corp. 6.625% Pfd. Series E Stock (GOODN); Prospectus (dividends paid monthly, last discussed at Item # 2. C)
Last Earnings Report (Q/E 9/30/23): SEC Filing
Core Diluted FFO per share: $.34, down from $.41 in the 2023 second quarter. This is the FFO allocable to common shares. This REIT has several preferred stocks outstanding that have a superior claim to cash.
In the press release, the company did not disclose the core FFO number for the 2022 third quarter, which was $.43. SEC Filed Press Release
10-Q for the Q/E 9/30/23 (Debt is discussed starting at page 17; 49 properties were encumbered with first mortgage liens)
Other Sell Discussions: Item # 2.B. Pared GOOD in Fidelity Account - Sold 8 at $16.69 (2/5/23 Post)(profit snapshot = $14.77); Item # 3.F. Pared GOOD - Sold 2.197 shares at $20.8 and 2.352 shares at $20.84 (6/4/21 Post)(profit snapshot = $20.77); Item 1.M. Pared GOOD-Sold 12 at $18.72 and 10 at $19.76 (6/20/20 Post)(profit snapshot = $48.17); Item # 1.C. Eliminated GOOD in Schwab Account-Sold 50+ at $20.88 and Item # 1.D. Sold Highest Cost GOOD Share in Fidelity Account at $21.36 (3/3/19 Post)(profit snapshots = $165.33)
A. Bought 3 Treasury Bills at the 11/20/23 Auction:
%202:22:24.png){kind=small}
Matures on 2/24/24
Interest: $39.52
Investment Rate: 5.429%
B. Bought 1 Treasury Bill at the 11/20/23 Auction:
%20%205:23:24.png){kind=small}
181 Day Bill
Interest: $26.3
Investment Rate: 5.461%
%201:23:24.png){kind=small}
56 Day Bill
Interest: $41.07
Investment Rate: 5.412%
4. Corporate Bonds:
A. Bought 1 Boston Properties Partnership 3.2% SU Maturing on 1/15/25 at a Total Cost of $96.368:
%203.2%25%201:15:25.png)
Issuer Operating Entity for Boston Properties Inc (BXP)
SEC Filed Earnings Press Release for the Q/E 9/30/23 and Supplemental
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa1/BBB+
YTM at Total Cost: 6.5165%
The YTM is inconsistent with the credit rating and implies more credit risk than accounted for in the rating.
Current Yield: 3.32%
Last Bond Offering (May 2023): Prospectus for $750M of 6.5% SU maturing in 2024.
I now own 3 bonds. I have two bonds from this issuer that will mature on 2/1/24. I am not likely to buy more.
B. Bought 2 Sixth Street Specialty Finance 3.875% SU Maturing on 11/1/24 at a Total Cost of 97.55:
.png)
Issuer: Sixth Street Specialty Lending Inc. Stock Quote (TSLX) - Externally Managed BDC
This BDC was previously known as TPG Specialty Lending. TPG Specialty Lending, Inc. Announces Corporate Name Change to Sixth Street Specialty Lending, Inc.
10-Q for the Q/E 9/30/23 (Summary of investments starts at page 6; debt discussion starts at page 38; the 2024 SU is the next one to mature, see page 42)I have a small position in the common stock. Last Discussed: Item # 2.O. Added to TSLX - Bought 1 at $17.58 (5/20/23 Post)
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa3/BBB-
YTM at Total Cost: 6.59%
The YTM is inconsistent with the credit ratings and is more in line with a high junk rating. At the moment, I am not concerned about the credit risk based on the most recent earnings reports and a maturity in less than 1 year.
Current Yield: 3.97%
C. Bought 2 Old Republic International 4.875% SU Maturing on 10/1/24 at a Total Cost of 98.842:
%2010:1:24%204.875%25%20.png)
Issuer: Old Republic International Corp. (ORI)
ORI Analyst Estimates | MarketWatch
SEC Filed Earnings Press Release for the Q/E 9/30/23
I recently eliminated my position in the common stock. Item # 6.D. Eliminated ORI - Sold 13+ at $27.27 (9/30/23 Post)(profit snapshot = $156.82)
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa2/BBB+
YTM at Total Cost: 6.273%
Current Yield at TC = 4.932%
I now own 4 bonds.
D. Bought 1 Entergy Arkansas 3.5% First Mortgage Bond Maturing on 4/1/26 at a Total Cost of 96.015:
Issuer: Wholly owned subsidiary of Entergy Corp (ETR)
ETR 10-Q for the Q/E 9/30/23 (Entergy Arkansas results can be found at pages 104-120)
First lien on substantially all assets owned by Entergy Arkansas
New Finra Page: Bond Page | FINRA.org
Credit Ratings: A2/A
YTM at Total Cost: 5.32%
The two year treasury note was trading at 4.88% when I bought this FM bond.
Current Yield at TC: 3.65%
I now own 3 bonds including 1 in a Roth IRA account.
I have no concerns about the credit risk.
The interest rate risk is minimal given the short maturity.
I would classify the interest rate risk for this bond as being what I call the risk of lost opportunity.
By using capital to buy this bond, I lose the opportunity to use the same funds to buy another bond, with the same or better credit risk, that pays more due to a rise in short term rates after my purchase. To secure that higher yield, I would have to sell the bond at a loss which I would not do.
5. Exchange Traded Baby Bonds:
A. Added 5 EAI at $21.5; 5 at $21.22 - Schwab Account:
Quote: Entergy Arkansas 1st Mortgage Bonds 4.875% due 2066 (EAI)
Cost: $213.69
Category: Exchange Traded Baby Bonds
Exchange Traded: Trades flat on the stock exchange just like a common stock. Whoever owns on the ex interest date receives the entire interest payment.
The issuer is Entergy Arkansas, see Item # 4.D. above. I prefer owning the Entergy Arkansas $1,000 par value FM bonds that mature within 5 years.
Entergy Arkansas may call at the $25 par value plus accrued and unpaid interest. If the issuer does not exercise that right, then the bond matures on 9/1/2066.
I am nibbling on the potentially long term first mortgage baby bonds ($25 par values) as I become somewhat less uncomfortable with their interest rate risk.
I am slightly less uncomfortable with the significant interest rate risk than when I last purchased this FM baby bond.
Last Discussed: Item # 5.B. Added 5 EAI at $20.1; 5 at $19.85 (10/21/23 Post) Item # 7.A. Added to EAI in Schwab Account - Bought 5 at $20.62; 5 at $20.36 (10/14/23 Post)
New Average Cost this Account: $21.42 (70 shares)
Yield at New AC = 5.69%
(.04875% x. $25 par value = $1.21875 annual interest per share ÷ $21.42 average cost per share = 5.6898%)
Next Ex Interest Date: 11/29/23
6. U.S. Equity Preferred Stocks:
A. Added to SLGPRI - Bought 3 at $17.5; 2 at $17.27:
Cost: $86.84
Slowly building up to a 100 share position.
Equity Preferred Stock with a $25 par value and a 6.5% coupon. Prospectus
Current Credit Rating: B1/B+
Issuer: SL Green Realty Corp. - Primarily a NYC Office REIT
Homepage - SL Green - NYC's Largest Commercial Landlord
Purchase Restriction: Each subsequent purchase will have to lower my average cost per share and can not be more than 5 shares.
Last Discussed: Item # 5.C. Added 2 SLGPRI at $17.99 (11/18/23 Post)
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy, a subcategory of Equity REIT Common and Preferred Stock Basket Strategy
New Average cost per share: $21.09 (47 shares)
Yield at New AC = 7.71%
(.065% coupon x. $25 par value = $1.625 annual dividend per share ÷ $21.09 total cost per share = 7.7051%)
Last Ex Dividend: 9/28/23
Dividends: Paid quarterly, non-qualified and cumulative.
Sell Discussions: Item # 3.A. Eliminated SLGPRI-Sold 20 at $25.96 (9/12/20 Post); Item # 5 Sold 50 SLGPRI at $23.6 (4/3/2014 Post)
Realized Gains to Date: $151.28.
I recently eliminated a duplicate common stock position. Item # 2.B. Eliminated Duplicate Position in SLG - Sold 20+ at $39.32 (9/9/23 Post)
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.
