Economy:
Fed Chair Powell Says Officials Need More ‘Good’ Data Before Cutting Rates - The New York Times The article summarizes Powell's interview on 60 minutes that aired last Sunday. Powell: "We think we can be careful in approaching this decision just because of the strength that we’re seeing in the economy." The progress on inflation "doesn’t need to be better than what we’ve seen, or even as good. It just needs to be good". Fed Chair Jerome Powell: The 2024 60 Minutes Interview - YouTube
Intermediate and longer term treasury yields have started to move back up so far this year.
I would attribute the rise to better than expected economic reports and to concerns developing about input cost inflation including the increased costs arising from the ongoing supply chain disruptions resulting from Houthi attacks on red sea cargo ships and the rerouting of those ships to the Cape of Good Hope. How Houthi rebel attacks in the Red Sea threaten global shipping | PBS NewsHour; How Houthi Attacks in the Red Sea Upended Global Shipping - The New York Times
Given my investment allocations, I will personally benefit from a rise in interest rates as my short term treasury bills and investment grade corporate bonds mature.
+++
Allocation Shifts Discussed in this Post:
Treasury Bills Purchased at Auction: $18,000 in principal amount
Corporate Bonds: $8,000 in principal amount
Individual Common Stocks (discussed in this post): -$36.11
(consisting of $1,181.63 in proceeds minus $1,145.52 in purchases)
Realized Gains Common Stocks: +$421.87
U.S. Equity Preferred Stocks: +$329.15
(consisting of $449.5 in purchases minus $120.5 in proceeds)
2024 Net Outflow Common Stocks/Stock Funds: -$10,964.31
2023 Net Outflow Common Stocks/Stock Funds: -$27,091.82
The outflows in common stocks and stock funds in 2023 and so far in 2024 is primarily a response to the risk free return in treasury bills purchased at auctions.
++++
Trump and His Party:
RealClearPolitics-Election-2024 Republican Presidential Nomination
RealClearPolitics - Election 2024 - General Election: Trump vs. Biden
The Supreme Court will reverse the Colorado Supreme Court decision without reaching the issue of whether Trump engaged in an insurrection.
The facts IMO support the Colorado's Supreme Court decision that Trump had in fact engaged in an insurrection.
The U.S. Supreme Court decision is likely to be unanimous. Many will disagree. 'Appalling!': Historians torch Supreme Court's handling of Trump ballot case - YouTube; Prof. Tribe on Trump ballot case: Colorado was doing its job applying the Constitution - YouTube
Whatever the reasoning, it would be a bad idea to kick Trump off the ballot. Trump needs to be decisively beaten in the vote counts, losing competitive states by such large percentages so that even most republicans will have to admit he lost. Trump will never accept defeat, irrespective of Biden's margin of victory. (My Video: Trump Will Never Accept an Election Loss - YouTube)
The U.S. Court of Appeals rejected Donald's argument that he was entitled to immunity from prosecution for alleged crimes committed while he was president. I discuss that decision in this YT video: Trump Has No Immunity for Crimes Committed as President - YouTube
E Jean Carroll lawyer says Trump used coded version of C-word against her-The Guardian Trump is crude and his behavior constantly reminds anyone who is not a cult member that he never matured into an adult. I discuss that Trump juvenile remark in this video: Trump's Juvenile Behavior - YouTube
Fact check: Trump makes false claims about Iraq, Iran and Nikki Haley in new Fox interview
Former DHS leaders: Mayorkas impeachment jeopardizes national security - The Washington Post There is no factual or legal basis for the impeachment. The impeachment resolution resulted in a tie vote, which would have resulted in a republican loss. To keep the issue alive, one republican changed his vote to no which resulted in 214 yes votes for impeachment and 216 against. The republicans may try again; provided Steve Scalise, who is being treated for cancer, is well enough to cast his vote.
If a Democrat wins the special election next Tuesday in New York's third congressional district, the seat formerly held by the republican George Santos who was expelled from office, the impeachment will not happen even if Scalise returns, provided the 3 republicans continue to vote no. Takeaways from the New York special election debate | CNN Politics And if the republican wins, the impeachment will likely happen.
One Democrat showed up in his hospital garb, recovering from a stomach operation, to cast a no vote.
The resolution would have passed if the former speaker Kevin McCarthy had not resigned in disgust after being removed by a vote initiated by the MAGA republicans who were unhappy that McCarthy did not shut the government down.
A Senate trial of Mayorkas would have highlighted the lack of factual and legal justification for the impeachment that would disgust swing voters even more, causing more to vote against Trump for President as well as republican candidates for the House and the Senate. I believe this impeachment effort will make it slightly more unlikely that republicans will maintain control of the House after the 2024 election. There are a growing number of independents and segments of republican voters who are becoming increasingly disgusted with Trump's party.
Key highlights of the Senate’s proposed border deal package; Trump and his GOP allies kneecap a border compromise they should have loved The Trump controlled republicans started to make false statements about what was in the bill even before bothering to read it. Johnson lying through his teeth about a bill he hasn't even read - YouTube
The GOP’s True Priority - The Atlantic David Frum, a former republican, correctly summarizes why the republicans are preventing passing of a bipartisan immigration compromise that gives the Democrats none of their priorities (e.g. pathway to citizenship for DACA children) and most of what the republicans wanted prior to this election year.
Trump instructed republican senators to vote against this legislation that would have passed the Senate without his interference. The bill is effectively dead. Aid to Ukraine in 2024 has been postpone by Trump's party, possibly terminated due to the House republicans who have tied national security issues to the Democrats accepting their demands on immigration.
Trump killed the compromise legislation since he wants nothing to be done to alleviate the problem prior to the election.
If the republicans wanted stronger measures than what was contained in the bipartisan bill, then run on those policy changes and then implement them when and if Trump wins and the republicans control both the Senate and House. They will get nothing between now and then which was their choice.
Good arguments can be made that Trump and his minions in the Senate and House have endangered National Security by tying Ukraine aid to the immigration issue. Cogent arguments are made by Niall Ferguson in this interview: "Ukraine WILL lose" | Prof. Niall Ferguson - YouTube He points out correctly that the the blocking of aid to Ukraine by the republicans will embolden Putin to take more territory and China to blockade and invade Taiwan. He points out that Iran would likely respond with more aggressive actions against Israel. With the U.S. proving it is no longer a reliable counterforce and deterrent to aggression by totalitarian regimes, Trump's party is making it more likely that the U.S. will suffer grievous losses in the future trying to roll back renewed aggression by totalitarian regimes.
After watching well over a 1000 interviews with Trump's supporters, I have concluded without any reservations or doubts that it would be entirely futile to have a fact based discussion with any of them. One Trump supporter interviewed in this video is certain that Michelle Obama is a man and is not the mother of Obama's two children. 2023's Craziest Trump Supporters - YouTube
Rep. Elise Stefanik: I wouldn't have certified 2020 election - YouTube; Rep. Stefanik: I would not have done what Pence did - YouTube Stefanik would not have done what VP Pence did and would have thrown out the certified election results in several states won by Biden.
++++
Putin and His Orwellian Empire of Misery:
Losses ∙ Russia ∙ WarSpotting — documented material losses in Russo-Ukrainian war
Russia blocks Boris Nadezhdin from presidential election
Ukraine cruise missiles strike Russia's Belbek airfield in Crimea - YouTube; Two Su-27 and One Su-30 Destroyed After Storm Shadow Missiles Hit Belbek Airbase - YouTube The Russian air defense systems were unable to stop the attack. Maybe the operators had to much vodka.
Massive blow to Putin as kamikaze drone explodes giant Russian oil refinery - YouTube
Putin Ally Issues Stark Warning on How 'Big War' With NATO Will Begin It is hard to know whether Medvedev is drunk all of the time or just crazy, or both.
Storm Shadow Flies Over S-300 Battery Heading to Belbek -- Embarassing - YouTube
++++
Special Counsel's Report on Biden's Retention of Classified Documents:
Biden took a hit from the Special Counsel report that he was an elderly man who had a poor memory. I discussed that report in a video. Biden's Retention of Classified Material and Memory Issues
Biden did not help himself on the mental agility issue at a press conference where he was at times confused and slow to formulate coherent sentences. He also called President of Egypt Abdel Fattah al-Sisi the “president of Mexico". Takeaways from special counsel’s report into Biden’s handling of classified documents; Biden shouts at reporters, confuses Mexico with Egypt as he defends mental competence - YouTube
Biden denied discussing classified information with his ghostwriter in 2017. He never mentioned having classified documents in interviews thereafter. Documents relating to the Afghanistan troop surge in 2009 were found in a damaged box, located in his garage and surrounded by "household detritus".
I do not believe that Biden is senile yet, but is clearly moving closer IMO. He is going to have increasing problems with his memory and formulating clear and coherent sentences. He needs to step aside now as the 2024 Democrat party candidate for President but will not do so. He can mitigate this issue by avoiding gaffes and appearing lucid in the debates later this year.
Trump has similar signs of senior moments but not as bad as Biden IMO.
I am younger than either candidate but close enough in age that I sometimes have senior moments.
++++
1. Small Ball Buys:
A. Added to MAA - Bought 1 at $129.7; 1 at $128.55; 1 at $125.2:
Quote: Mid-America Apartment Communities Inc. (MAA) - Apartment REIT
Cost: $383.45
Last Discussed: Item # 3.B. Started MAA - Bought 1 at $133.36; 1 at $131.17 (12/23/23 Post) I discussed the 2023 third quarter report in that post. SEC Filing
Average cost per share: $129.72 (5 shares)
Dividend: Quarterly at $1.47 ($5.88 annually), increased from $1.4 effective for the 2024 first quarter payment. MAA Announces 5% Increase to Quarterly Common Dividend
Dividends MAA | Luxury Apartment Rentals
The annual rate was $2.94 in 2014. Doubling the dividend in 10 years would be superior to most REITs. The past may not be prologue for the future however.
Yield at AC per share: 4.53%
Last Ex Dividend: 1/11/24
2023 Tax Characterizations of Dividends:
MAA Announces Taxable Composition of 2023 Distributions MAA
The Section 199A classification (100%) refers to a new provision in the tax code that allows individuals to deduct up to 20% of their qualified business income for tax years starting in 2017 through 2026 when the provision sunsets. 26 U.S. Code § 199A - Qualified business income-U.S. Code 2023 Section 199A Dividends - YouTube The deduction is calculated using IRS form 8995. I checked my 2022 return and noted that 20% of my section 199A dividends were deductible. The deduction amount is entered on line 13 of the 1040 and was added to the standard deduction which in effect reduces my taxable income by the amount of the deduction.
If part of a REIT dividend is classified as a return of capital ("ROC"), then it can not be a section 199A dividend. Without actually researching the issue, I have a larger amount of REIT dividends classified as ROC than §199A dividends. The amount of the dividend classified as ROC will not be taxable in the year paid, but will reduce the tax cost basis which will increase the capital gain or decrease the loss, as the case may be, when the shares are sold.
Last Earnings Report (Q/E 12/31/23): This report was released after my purchases.
Revenues: $542.247M
GAAP E.P.S. = $1.37
FFO per share: $2.53
Core FFO Per share: $2.32
Core FAD (funds available for distribution) per share = $2.1
FAD: $199.3M
Of those numbers I view the FAD as the most important.
Average Physical Occupancy: 95.5%
Average Effective Rent per unit: $1,685
Total Units: 95,286, EX-99.2
2024 Guidance:
B. Added to AY - Bought 5 at $19; 5 at $18.53:
Cost: $187.69
Website: Atlantica- Sustainable Infrastructure
AY SEC Filings (foreign issuer forms)
Corporate Presentation Nov-2023.pdf
Average cost per share: $19.42 (25 shares)
Dividend: Quarterly at US$.45 per share ($1.78 annually)
Yield at AC per share: 9.17%, rounded up.
Last Ex Dividend: 11/29/23
SU Bond Ratings: BB+ by Fitch and S&P
Fitch Affirms Atlantica Sustainable Infrastructure plc at 'BB+'; Outlook Stable (8/30/23)
Last Discussed: Item # 1.C. Started AY - Bought 10 at $20; 5 at $19.55 (12/16/23 Post) I discussed the 2023 third quarter report in that post along with other issues that are concerning to me. SEC Filing
Maximum Position: 100 shares
Purchase Restriction: 5 shares lots with each purchase required to be at the lowest price in the chain.
C. Added to TAC - Bought 5 at $7.35; 5 at $7:
Quote: Transalta Corp. (TAC)
Cost: $71.75
TAC Analyst Estimates | MarketWatch
Last Discussed: Item # 1.B. Started USD Priced TAC - Bought 10 at $8.12 (12/16/23 Post)
Website: TransAlta - A Clean Energy Solutions Company
I discussed the 2023 third quarter report in this post. Item # 1 Bought 100 TA:CA at C$10.78 (11/11/23 Post); SEC Filed Earnings Press Release for the Q/E 9/30/23 I am now buying up to 100 shares of the USD priced shares.
The 2023 4th quarter report is scheduled from release on 2/23/24.
TAC Average Cost per share: US$7.65 (30 shares)
Dividend: C$.06 per share
Next Ex Dividend: 2/29/24
It is not possible to calculate a dividend yield since the amounts will depend on the CAD/USD exchange rates for the dividend payments. I do not view the dividend as a material consideration.
D. Added to NSA - Bought 5 at $36.63:
Quote: National Storage Affiliates Trust (NSA) - Internally Managed Storage REIT
Cost: $183.1
New Average Cost Per share: $37.58 (20 shares)
Dividend: Quarterly at $.56 per share ($2.24 annually), last raised from $.55 effective for the 2023 second quarter payment.
Yield at New AC = 5.96%
I discussed NSA in my last post: Item # 3.C. Started NSA - Bought 5 at $38.41, 5 at $37.95; 5 at $37.35 (2/2/24 Post) I discussed the 3rd quarter report in that post.
The 4th quarter earnings report is scheduled for release on 2/28/24.
D. Added to NOMD - Bought 10 at $17.45:
Quote: Nomad Foods Ltd. (NOMD)
Cost : $174.5
Nomad Foods "is Europe's leading frozen food company. The Company's portfolio of iconic brands, which includes Birds Eye, Findus, iglo, Ledo and Frikom, have been a part of consumers' meals for generations, standing for great tasting food that is convenient, high quality and nutritious."
I decided to add 10 shares after the company initiated a dividend. Nomad Foods Declares Initial Quarterly Dividend - Nomad Foods
NOMD Analyst Estimates | MarketWatch
NOMD SEC Filings (foreign company forms)
Investor Relations | Nomad Foods
Website: Home | Nomad Foods
2022 compared to 2021: In € Millions
 |
| Page 51 Annual Report |
Last Discussed: Item # 7.G. Added to NOMD - Bought 2 at $13.12; 2 at $12.86 (11/15/22 Post)
New Average Cost per share: $19.92 (60 shares)
Dividend: Quarterly at $.15 per share
Yield at New AC = 3.01%
Last Ex Dividend: 2/8/24 (owned all as of)
Last Earnings Report (Q/E 9/30/23):
Nomad reports in Euros.
Reported E.P.S. €.46
Adjusted E.P.S. €.43
Profit was negatively impacted by higher interest costs.
Revenue increased .5% to €764M
Organic revenue increased 1.6% "comprised of a 11.2% decline in volume/mix offset by a 12.8% increase in price." I view organic revenue growth resulting from price increases offsetting a significant decline in volume to be a negative. Hopefully input cost inflation will start to go down.
Repurchased €65.8 in stock during the quarter.
Adjusted E.P.S. for 9 months: €1.29.
2023 Guidance: "For the full year 2023, driven by our operational performance and share repurchase program, we are raising our Adjusted EPS guidance to €1.57 to €1.60 from €1.54 to €1.57. We maintain our full-year guidance of mid-single-digit organic revenue growth and Adjusted Cash Flow conversion in the range of 90% to 95%, unchanged from our last update in September."
At the midpoint of 2023 adjusted E.P.S. guidance, which would be €1.585, and assuming a EUR/USD conversion rate of 1.07, 2023 adjusted E.P.S. would be US$1.696.
E. Added to BMY - Bought 1 at $48.56; 1 at $48.32; 1 at $48.15:
Quote: Bristol Myers Squibb Co.
Cost: $145.03
2022 Annual Report Summary of risk factors starts at page 23. This report contains detailed discussions of risk that I do not generally discuss including ongoing product and other litigation.
Pharmaceutical Research & Development Pipeline
BMY Analyst Estimates | MarketWatch
Last Discussed: Item # 1.G. Added to BMY in Schwab Account - Bought 1 at $53.34; 1 at $51.76; 1 at $51.1; 1 at $50.2 (11/4/23 Post) I discuss several problems in that post which still exist IMO.
I am buying in my Schwab account the shares sold in my Fidelity account. Item # 1.A. Eliminated BMY in Fidelity Account - Sold 14 at $74.64 (2/13/23 Post)(profit snapshot = $206.75)
I am super cautious in adding to my BMY position.
The main problem, as I previously discussed in detail, is the substantial decline in Revlimid revenues due to directly or indirectly to generic competition. The direct revenue loss would be patients taking the generic. The indirect loss relates to BMY having to lower its price to compete with the generics which results in lower revenues.
BMY has agreements with the generic Revlimid companies that limit the amounts that can be sold. The limits have not been disclosed as far as I have been able to determine. The Morningstar analyst believes that the restraints will continue through 2025 and expects no limits starting in 2026.
A lot depends on the unknowable future revenues from drugs that are currently in clinical trials.
Average cost per share: $57.25 (29+ shares)
Dividend: Quarterly at $.60 per share ($2.4 annually), last raised from $.57 effective for the 2024 first quarter payment. The quarterly dividend was at $.32 in 2010.
Dividend History - Bristol Myers Squibb
I am reinvesting the dividend.
Yield at AC per share: 4.19%
Last Ex Dividend: 1/4/24
Last Earnings Report (Q/E 12/31/23):
Comparison are to the 2022 4th quarter
Revenues: $11.477B, up from $11.406B
GAAP E.P.S. = $.87, down from $.95
Non-GAAP E.P.S. $1.7, down from $1.82
The main add back to GAAP net income was the $2.278B in "amortization of acquired intangibles", which is a noncash charge. That would be prior to reducing that amount by a tax adjustment:
Product Sales:
Revlimid produced $1.450B in revenues for the quarter, certainly a respectable number but that was down from $2.26B in the 2022 4th quarter and $3.328B in the 2021 4th quarter.
Revenues in the 2023 third quarter were reported at $1.429B, SEC Filed Press Earnings Press Release for the Q/E 9/30/23
Analyst Reports (available to Schwab customers)
Morningstar (2/2/24): 4 stars with a fair value estimate of $63. The analyst believes that mixed results from new drug launches is causing the poor stock performance. The immunology drugs Sotyktu and Zeposia are increasing sales but at lower than expected pace. The analyst notes that the revenues from the CAR-T drugs Breyanzi and Abecma have been restrained by "some supply issues". Three other compounds have posted "solid results" and they are the blood treatment drug Reblozyl, the cancer drug Opdualag, and the cardiovascular drug Camzyos. The combined 4th quarter revenues for those 7 compounds was $995M.
S&P (2/2/24): 3 stars with a 12 month PT of $51 (noting that the drug Eliquis, which is now the top revenue generating drug for BMY, is one of the drugs whose price is being negotiated with Medicare)
Argus (10/30/23): Hold. The analyst notes that the stock price sells at a steep valuation discount to its peers which reflects in the analyst's opinion valid concerns about generic competition.
Some Other Recent Sell Discussions: Item # 2. Eliminated BMY in Vanguard Taxable Account - Sold 15+ at $77.56 (5/5/22 Post)(profit snapshot =$279.11); Item # 2.F. Pared BMY in Fidelity Taxable-Sold 1.203 at $68.8 (9/10/21 Post)(profit snapshot = $6.89); Item # 3.G. Sold 1 BMY at $67.1-Schwab Taxable (6/12/21 Post); Item # 3.B. Pared BMY in Vanguard Taxable-Sold 2 at $65.63 (5/14/21 Post )(profit snapshot = $6.63)
BMY Realized Gains to Date: $925.93
2. U.S. Equity Preferred Stocks:
With the current consensus being that the FED will cut the federal funds rate this year, I am willing to make small adds to REIT equity preferred stocks that have yields in the 6% to 7% range.
Preferred stocks issued by REITs pay cumulative dividends which simply means that the dividend can only be deferred and can not be eliminated outside of a bankruptcy proceeding. The dividend can not be deferred until the common stock cash dividend is eliminated and no cash can be used to buy back common stock during the deferral period. Resumption of a common stock cash dividend payment would require the payment of all deferred preferred stock dividends. A REIT has to pay a common stock dividend to maintain its tax status when it has net income.
I currently own two REIT equity preferred stocks where the issuer has ceased paying cash common stock dividends but has continued so far to pay its preferred stock dividends.
Those two preferred stocks are HPPPRC issued by Hudson Pacific Properties Inc. (HPP) and VNOPRM issued by Vornado Realty Trust (VNO).
When the cash common stock dividend has been eliminated, and no cash is used to buy back common stock, the legal restraints for deferring the preferred stock dividend are no longer present, and there is accordingly an enhanced danger of deferral. The elimination of the REIT common stock dividend also points to significant problems in operations that may warrant a deferral.
A. Added to REXPRC - Bought 10 at $21.8:
Quote: REXR-PC
Issuer: Rexford Industrial Realty Inc. (REXR)
Investment Category: Advantages and Disadvantages of Equity REIT Cumulative Preferred Stocks
Last Discussed: Item # 4.D. Bought 5 REXPRC at $20.1 (10/21/23 Post)
Coupon: 5.625% paid on a $25 par value.
Dividends: Paid Quarterly and Cumulative
Average cost per share: $21.23
Yield at AC = 6.62%
Stopper Clause: Standard.
Issuer Optional Call: On or after 9/20/24
Maturity: None, potentially perpetual.
B. Sold 5 METPRA at $24.07:
Profit Snapshot: +$7.58
Last Discussed Item # 2.A. Bought 5 METPRA at $22.56 (11/4/23 Post)
Investment Category: Advantages and Disadvantages of Equity Preferred Floating Rate Securities Snapshots of prior realized gains can be found in this post.
Coupon: Greater of 4% or 1% above the 3 month Libor Rate
Par Value: $25
Dividend: Quarterly, non-cumulative and qualified
Optional Call: At par value plus accrued and unpaid dividends-anytime now at issuer's option
Stopper Clause: Yes
Quote: NSA-PA
Issuer: National Storage Affiliates Trust (NSA) - A Storage REIT
See Item # 1.D. above.
Investment Category: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks
REIT Equity Preferred Stock
Par Value: $25
Coupon: 6%
Dividends: Paid quarterly and cumulative.
Yield at $23.15: 6.48%
Last Ex Dividend: 12/14/23
Optional Call: At par value + accrued and unpaid dividend on or after 10/11/22.
Maturity: None, potentially perpetual
Stopper Clause: Standard
3. Treasury Bills Purchased at Auction:
A. Bought 10 Treasury Bills at the 2/5/24 Auction:
%205:9:24%20.png){kind=small}
91 Day Bill
Matures on 5/9/24
Interest: $132.33
Investment Rate: 5.394%
B. Bought 5 Treasury Bills at the 2/7/24 Auction:
Interest: $85.61
This was a redeployment of the proceeds received from a maturing treasury bill:
C. Bought 3 Treasury Bills at the 2/8/24 Auction:
%204:9:24%20.png){kind=small}
Matures on 4/9/24
Interest: $24.59
Investment Rate: 5.402%
The purchase was funded with the proceeds from this T Bill:
4. Corporate Bonds:
A. Bought 2 Kimco 3.85% SU Maturing on 6/1/25 at a Total Cost of 97.76:
%20.png)
Issuer: Originally issued by Weingarten Realty, which was acquired by Kimco Realty Corp. (KIM)
FINRA Page: Bond Page | FINRA.org
Credit Ratings: Baa1/BBB+
YTM at Total Cost: 5.63%
Current Yield at TC = 3.938%
B. Bought 2 Valero 3.65% SU Maturing on 3/15/25 at a Total Cost of 98.189:
%203:15:25.png)
Issuer: Valero Energy Corp. (VLO) - A Refiner
VLO Analyst Estimates | MarketWatch
VLO SEC Filed Earnings Press Release for the Q/E 12/31/23 (net income of $1.2B for the quarter and $8.8B for 2023)
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa2/BBB
YTM at Total Cost: 5.355%
Current Yield at TC: 3.72%, rounded up.
The 1 year treasury bill was trading a 4.85% yield when I made this purchase. A BBB rate corporate yield advantage, of close to .5%, is about average.
Last Bond Offering (2/2022): Prospectus for $650M of 4% SU Maturing in 2052.
C. Bought 2 Healthpeak 3.4% SU Maturing on 2/1/25 at a Total Cost of $98.119:
%20.png)
Issuer: Healthpeak Properties Inc. (PEAK) - A Healthcare REIT
I have a small ball position in the common stock.
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa1/BBB+
YTM at Total Cost = 5.389%
Current Yield at TC: 3.465%
PEAK is in the process of acquiring the REIT Physicians Realty Trust (DOC) which I currently view as a long term positive. In response to that acquisition offer, which I viewed as inadequate and would result in a dividend cut for DOC shareholders, I eliminated my DOC position. Item # 1. Eliminated DOC - Sold 61+ at $13.71 (1/20/24 Post)(profit snapshot = $39.05)
D. Bought 2 W.P. Carey 4% SU Maturing on 2/1/25 at a Total Cost of 98.675:
%204%25%202:1:25%20%20.png)
Issuer: W. P. Carey Inc. (WPC)
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa1/BBB+
I now own 8 bonds, with 2 of those owned in a Roth IRA account.
YTM at Total Cost: 5.408%
Current Yield at TC = 4.0537%
Last SU Bond Offering (10/2021): Prospectus $350M of a 2.45% SU Maturing in 2032.
I have 4 W.P. Carey SU bonds that mature on 4/1/24.
5. Small Ball Sells:
A. Eliminated MOR - Sold 10 MOR at $17.21; 30 at $17.04:
Quote: MorphoSys AG ADR - A German Biotech
Proceeds: $683.3
Profit Snapshots: +$256.41
Last Discussed: Item # 1.D. Eliminated Duplicate MOR Position (Fidelity Account) - Sold 25 at $9.78 in (12/30/23 Post)(profit snapshot = $10.87)
Investment category: Lottery Ticket Basket (maximum exposure $1,000 + any net prior realized gains)
I discussed MOR in several comments to my last post.
Novartis has agreed to buy MOR for €68 per ordinary share which is equivalent to €17 per ADR share. The ADR ratio is 1 ordinary share equals 4 ADR shares. Depositary Receipts
The ADR price is currently trading at a discount to the offer price using the current EUR/USD conversion rate.
A financial writer in the biotech space, Adam Feurerstein, claimed that Novartis would walk away from the deal and pay a small break up fee when and if the FDA rejected a new drug application for MOR's Pelabresib or refused to approve it. MOR issued a press release stating that this story was factually wrong without providing details. Novartis Intended Acquisition of MorphoSys: Potential Implications and Uncertainty
I believe that MOR can not respond more fully since the German financial regulatory authority has to review the merger agreement, apparently just for the adequacy of the disclosures, before the merger agreement can be publicly disclosed, which limits now what MOR can say about it.
There may be some concern about whether the trials are sufficiently adequate to support an FDA new drug application. I do not have any concrete information that this may be the case or is not the case. Since the application has not been filed and may not be filed for several months, and given the time delay from that filing to a FDA decision on the application, the merger would most likely be concluded before the FDA decision, so Feurerstein's argument is predicated on the FDA rejecting the new drug application.
From my perspective, and given that I only owned 30 shares when this merger announcement was made, it was simply not worth spending more time thinking about it. Just take the profit and forget about it.
B. Eliminated HBAN in Taxable Accounts - Sold 40+ at $12.27:
Quote: Huntington Bancshares Inc. (HBAN)
Proceeds: $498.33
I still own a few shares in a RI account with a lower cost basis.
HBAN Analyst Estimates | MarketWatch
Investment Category: Regional Bank Basket Strategy
I have soured on this stock sector for reasons previously discussed. To summarize briefly, the main reasons are net interest margin continuing to trend lower compared to the year ago quarter, more commercial property loans going bad, declines in both GAAP and Non-GAAP E.P.S. numbers compared to the year ago quarter, and overall unsatisfactory dividend growth.
Profit Snapshot: +$165.46
Last Discussed: Item # 6.C. Pared HBAN - Sold 10 at $12.55 (8/12/23 Post)
Dividend: Quarterly at $.155 ($.62 annually), last raised from $.15 effective for the 2021 4th quarter, last raised from $.15 effective for the 2022 first quarter payment.
HBAN Dividend History | Nasdaq
Dividend History: Poor. As with other regional banks that had near death experiences in 2008-2009, the quarterly dividend was slashed from $.265 per share to $.1325 effective for the 2008 second quarter and then to $.01 effective for the 2009 first quarter. The $.01 per share rate was kept until it was raised to $.04 effective for the 2011 third quarter. There were dividend increases each year starting with 2013 but that ended with a raise from $.15 to the current $.155 effective for the 2021 4th quarter.
I doubt that the quarterly rate will return to $.265 per share in my lifetime.
Last Ex Dividend: 12/15/23
Last Earnings Report (Q/E 12/31/23):
SEC Filed Earnings Press Release
Comparisons are to the 2022 4th quarter.
GAAP E.P.S. = $.15, down from $.42.
Non-GAAP E.P.S. = $.31
"Excluding the after tax impact of Notable Items, primarily related to the FDIC Deposit Insurance Fund special assessment, adjusted earnings per common share were $0.27. Additionally, the mark-to-market of the pay-fixed swaptions hedging program during the quarter reduced pre-tax income by $74 million, or $0.04 on an EPS basis."
NIM: 3.07%, down from 3.52%
Charge off ratio: .31%, up from .17%
NPA Ratio: .58%
"Net interest income decreased $52 million, or 4%, from the prior quarter, and decreased $146 million, or 10%, from the year-ago quarter."
Average total loans and leases increased by $445M from the prior quarter to $121.2B and by $2.3B compared to the 2022 4th quarter.
Average total deposits increased by $1.5B or 1% from the prior quarter.
Gains over $200: Item # 3.A. Sold 100 HBAN at $16.12 (2/3/18 Post)(profit snapshot = $254.75); Sold 50 HBAN at $9.53 (10/17/14 Post)(profit snapshot = $275.75);
HBAN Realized Gains to Date: $1,334.29
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.
dear Southgent, i have been following u for years and great respect your thinking and posts and your short YOUTUBE vids are enlightening and beside being humorous , they are also very serious at the same time; i just wanted to let u know, how helpful u are to some of us!
ReplyDeleteIf you are referring to my exercise videos, I can not give anyone medical clearance to follow my vigorous routines, and my youngest nephew who has both a MD and MBA from Northwestern claims that he is do busy to assess medical fitness issues. He has told me that, even though I am a fine specimen who is still breathing, to go easier on the exercises.
Deleteha ha ha
DeleteAs far as my portfolio allocations go this week, I am continuing to buy corporate bonds and treasury bills while knocking down my allocation to regional bank stocks and increasing slightly my exposure to CEFs that pay monthly dividends.
ReplyDeleteI received a notice that Williamson County, TN is going to redeem early my 15 GO bonds that would have matured in 2027. The coupon is only 2.5% so I will be able to reinvest the proceeds in a higher after tax yielding securities but this adds to my reinvestment problems. The GO bonds issued by this country, where I live, have AAA ratings.
I participated in today's 3 and 6 month treasury bill auctions and will participate in the 4 month auction on Wednesday and my largest purchase will be in the 2 month treasury bills on Thursday. I have 15 T Bills maturing in my Schwab account tomorrow and $25K in T Bills and corporate bonds that mature on Thursday.
It looks have about $7K to $10K in corporate bond purchases that I will discuss in my next post.
I dodged a problem with my Office Property (OPI) 4.25% SU bonds that mature on 5/15/24. That office REIT was looking increasingly troubled but has managed to renew its credit facility and has called those bonds at par value + accrued interest early assuming no hitches in closing a senior secured bond offering today.
When I bought the 2024 SU bonds awhile back, the REIT had an investment grade rating which has suffered several downgrades to the current CCC. The cost to the REIT for raising the funds to pay off the 5/15/24 maturity was steep. OPI had to raise capital using senior secured bonds maturing in 2029 that have a 9% coupon in a private placement.
https://www.opireit.com/investors/news/news-release-details/2024/Office-Properties-Income-Trust-Prices-300-Million-of-Senior-Secured-Notes-Due-2029/default.aspx
I published a video earlier today discussing the January 2024 inflation report that is causing a mass investor anxiety attack today:
ReplyDeletehttps://www.youtube.com/watch?v=r3iweu0dems&t=219s
I am doing some scatter shot, small ball buying today.
ReplyDeleteI tend to significantly discount the owners equivalent rent contribution to inflation, a phone and pretend expense that is not actually paid. The annual increase in that number, weighted at close to 26% in CPI, was 6.2% through January.
Annual CPI actually decreased from 3.4% to 3.1%, but the expectation was for 2.9%, which was not realistic given the rise and weighting in owners equivalent rent.
The core CPI number is proving stubborn at 3.9% and had a significant seasonally adjusted month-to-month rise of .4% up from .3% in the prior two months.
I am not as negative about this report as investors today.
I participated in the 119 day T Bill auction today. The investment rate was 5.395%. The current FF range is 5.25% to 5.5%. This T Bill yield signals that the buyers do not anticipate a change in FF rate within the next 4 months.
ReplyDeleteCRISPR Therapeutics AG (CRSP)
ReplyDelete$87.52 +8.48 +10.73%
Last Updated: Feb 15, 2024 at 10:29 a.m. EST
https://www.marketwatch.com/investing/stock/crsp?mod=search_symbol
I am back to positive territory on my CRSP position. I do not see any news today.
On 2/13, CRSP did sell $280M in common shares at $71.5 to institutional investors, sit representing a premium of more than 10% of the stock's 30-day volume-weighted average price.
https://ir.crisprtx.com/news-releases/news-release-details/crispr-therapeutics-announces-280-million-registered-direct
The FDA has approved its gene editing for sickle cell anemia and for the treatment of transfusion-dependent beta thalassemia (TDT) in patients 12 years and older.
https://ir.crisprtx.com/news-releases/news-release-details/vertex-and-crispr-therapeutics-announce-us-fda-approval
https://ir.crisprtx.com/news-releases/news-release-details/crispr-therapeutics-announces-us-food-and-drug-administration
The EU approved on 2/13/24 the gene editing therapies for sickle cell and beta thalassemia:
https://ir.crisprtx.com/news-releases
Remember that a 60% in those two therapies have been sold to Vertex.
A lot will now depend on CRSP succeeding on one of its cancer therapies still in trials or possibly the diabetes or cardiovascular therapies. As I recall, one of the cancer therapies is further along.
https://crisprtx.com/pipeline
My 2 shares are waiting. Currently $60 or so underwater.
DeleteI have published a new post.
ReplyDeletehttps://tennesseeindependent.blogspot.com/2024/02/aio-argopra-asb-brt-cohr-dpg-fcbc-gladz.html
Some bond and stock trades made this week will be discussed in my next post.