Economy:
Personal Income and Outlays, January 2024:
Annual PCE Price Index: 2.4%, down from 2.6% for the 12 month period ending in December 2023.
Annual Core PCE Price Index: 2.8%, down from 2.9% "
Month-to-Month Core PCE Prices: .4%
PCE report January 2023: Key inflation measure rose 0.4%
Shelter "expense" was up 6.1% Y-O-Y in January, down from 6.3% through December. Excluding that category, the core annual PCE price increase was 1.8%.
Pending Home Sales Receded 4.9% in January
+++++
Allocation Shifts Discussed in this Post:
Treasury Bills Purchased at Auction: $15,000
Treasury Notes Purchased at Auction (2 YR): $1,000
Corporate Bonds: $10,000 in Principal Amount
Outflow Individual Common Stocks: -$797.49
(consisting of $2,017 in proceeds minus $1,219.51 in purchases)
Realized Gains Common Stocks: +$274.88
Stock Mutual Fund: +$50
Outflow Stocks/Stock Funds: -$747.49
Leveraged Senior Loan CEF = $28.35
2024 Outflow Common Stocks: -$16,896.21
The reduction in my common stock allocation is primarily due to the risk free returns available from treasury bills, taking into account my investment objectives and no financial reason to take risks.
++++
Putin and Orwellian Terrorist State:
Losses ∙ Russia ∙ WarSpotting — documented material losses in Russo-Ukrainian war
Putin Ally Threatens to 'Destroy' Poland: 'We Won't Even Think Twice'
Russia will protect itself with nuclear weapons, warns Putin - YouTube
Two years of war has been a disaster for Russia with no end in sight
Nighttime blaze engulfs Novolipetsk metallurgical plant in Russia - Euromaidan Press
A breakaway region in Europe is asking Russia for protection. Here’s what to know This region is part of Moldova's internationally recognized territory that Putin wants to absorb into the Russian Federation. The Russian financed separatists will do what Russia wants. What do the Transnistrians think of the pro-Russian separatists' appeal to Moscow? | DW News - YouTube
The eastern Ukrainian separatists requested Russia's protection in 2014. This is generally viewed as the first step in Russia's absorption of another country or a portion thereof. If western nations do not like it, then we can all die in a Russian initiated nuclear war.
In the coming years, Russian financed and controlled persons in other countries will try to create separatist regions and then call for Russia's protection. An "election" Russian style will be held where over 95% of the voters elect to join the Russian Federation. Russia's next targets will be all or part of the 3 Baltic nations.
Russians "saying the country is moving in the right direction is the highest in decades, 71% last month". Russia’s Brutal War Calculus-The New York Times Support among Russians for Putin's genocidal war in Ukraine remains strong and higher than 71%.
Most Russians, based on polling, support their Dear Leader's Orwellian and totalitarian state organized with Putin as the Don and a few others as underbosses or Capos who can share in the spoils of Putin's Kleptocracy.
A few crumbs are tossed to the remaining 140M or so Russians to keep them from rebelling and improving their circumstances by removing Putin and a few thousand loyalist that control key sectors and choke points in Russia.
Russian spy plane shot down in suspected friendly fire incident - YouTube
My video: GOP's Return to Isolationism with a Pro Putin Result - YouTube
++++
Trump and His Party:
RealClearPolitics-Election-2024 Republican Presidential Nomination
RealClearPolitics - Election 2024 - General Election: Trump vs. Biden
The Supreme Court has decided to review the D.C. Circuit Court's decision that Trump did not have absolute immunity from criminal prosecution after leaving office for committing allegedly unlawful acts to subvert the election results and to remain in Office. Appellate Court Decision.pdf I discussed this matter in a video: Supreme Court will decide whether Trump has absolute immunity from criminal prosecutions-YouTube
The end result, which may have been desired by the Republican Justices, is that the trial will be delayed until after the election.
If the Republican Justices wanted a trial before the election, they could have accepted a direct appeal from the district court, bypassing the court of appeals altogether, which the Justices refused to do, or could have acted with haste in granting the petition for review and to expedite the briefing and oral arguments with a decision no later than early April, and they refused to do that as well.
If the Republican Justices rule that Trump has immunity from prosecution for the acts detailed in the Indictment, that would mark the beginning of the end of America's democracy.
United States v. Donald J. Trump - Indictment
Republicans do not read the indictments against Trump. If one did, and I have seen no indication yet that one has, they would have to offer rebuttal evidence that would be admissible in a court which is something that they cannot do. It is much easier to resort to name calling and schoolyard taunts, or just to make conclusory statements without providing any factual support (e.g. Biden is behind the indictment, which in TrumpWorld has no factual basis, in an effort to keep Trump from becoming President).
Nicolle Wallace: ‘SCOTUS willing to listen to the argument that America has a king’ - YouTube
Donald Trump Tried to Corrupt Attorney in Classified Docs Case—Prosecutor
No. 2 Senate Republican John Thurne endorses Trump for president Thurne knows everything that there is to know about Trump. None of the republican politicians who have endorsed Trump, and most have, can claim that they were unaware of what Trump has done and said in the past. By endorsing Trump, republicans have declared who and what they are to anyone paying attention. Senior Republican who called Trump ‘inexcusable’ endorses him for president-The Guardian
Donald Trump is the Republican Party.
Zelensky "can't understand how Donald Trump can be on the side of Putin". Zelensky says Trump doesn’t understand Putin because he has never fought him
Trump won't say if he wants Russia or Ukraine to win the war. See Zelensky's reaction - YouTube
Fact check: Trump delivers another lie-filled CPAC speech; Trump: I Am A 'Political Dissident'; CPAC 2024 in 120 Seconds - YouTube
Trump suggests his mug shot and indictments appeal to Black voters
Trump: "My mug shot, we've all seen the mug shot. And you know who embraced it more than anybody else: the Black population." He thinks he's Biggie Smalls?': Capehart torches Trump's 'unbelievably racist' remarks - YouTube; Trump Says His Indictments Are Helping Him Attract Black Voters - The New York Times
My video: Trump Appeals to Black Voters - YouTube
Here’s what South Carolina GOP voters say if Trump is convicted of a crime - YouTube
Former CIA Director explains how Russia is using 'Republican lawmakers as tools’ - YouTube
NRA, former CEO Wayne LaPierre found liable in civil corruption trial | full coverage - YouTube
"Dobbs and Democracy", 137 Harvard Law Review 728.pdf
Pro-Trump CPAC speaker pledges 'end of democracy' - YouTube
Trump Sneakers - SNL - YouTube
'It would be a disaster for everyone': Should Biden debate Trump? - YouTube Trump will constantly interrupt Biden and will make one false claim right after another interspersed with outrageous reality creations.
Retired 4 Star Marine General John Kelly: “The depths of his dishonesty is just astounding to me. The dishonesty, the transactional nature of every relationship, though it’s more pathetic than anything else. He is the most flawed person I have ever met in my life.” Former White House chief of staff tells friends that Trump ‘is the most flawed person’ he’s ever met
++++++
1. Small Ball Purchases:
I am discussing in this blog and a few other recent ones the purchase of utility stocks.
Utility stock purchases are characterized by me as "bond substitutes". That characterization only defines the investment objective which is the dividend yield plus 2%+ in an annual realized gain on the shares.
With starting dividend yields generally in the 4% to 5.5%, the goal is a modest 6% to 7.5% annual total return with each purchase classified as a bond substitute.
A common stock dividend can be reduced or eliminated which is not the case for a bond. And, unlike a fixed coupon bond, a utility may raise its payout.
The 2+% annualized realized gain on the shares is a minimum risk premium associated with stock risks that I want over and above the dividend paid by the bond substitute stock.
A. Started GLAD - Bought 10 at $10.09:
Quote: Gladstone Capital Corp. (GLAD) - Externally Managed BDC
Cost: $100.86
Investment Strategy: Monthly Income Generation.
Annual Report for the 2023 F/Y Ending on 9/30/23 Summary of risk factors starts on page 21 and ends at page 43.
10-Q for the Q/E 12/31/23 Summary of investments starts at page 6. An investment with a (P) indicates that the loan is on nonaccrual. Scrolling through the investment list, I found one loan on nonaccrual and that was a $6.14M loan to Edge Adhesives Holdings (page 9) that had been marked down to $2.829M as of 12/31/23.
Investments by Security Type:
 |
| P. 27, 10-Q |
Dividend: Monthly at $.0825 per share ($.99 annually)
GLAD Dividend History | Nasdaq
Yield at $10.09: 9.61%
Next Ex Dividend: 3/20/24
Net Asset value per share history: Sourced from 10-Q filings.
12/31/23: $9.61
12/31/22: $9.06
12/31/21: $9.44
12/31/20: $7.61 (bad year for BDCs)
12/31/19: $8.08
12/31/18: $7.98
12/31/17: $8.48
12/31/16: $8.36
12/31/15: $8.38
12/31/14: $9.31
12/31/13: $10.1
12/31/12: $9.19
12/31/11: $9.9 (taking hit from Near Depression period fallout)
12/31/10: $11.74
12/31/09: $11.92
12/31/08: $12.04
12/31/07: $15.08
12/31/06: $13.75
IPO: 2001 at $15 with proceeds to GLAD at $13.95 before deducting about $1M in internal expenses. Prospectus
Last Earnings Report (First Fiscal Quarter Ending 12/31/23): SEC Filed Earnings Press Release
Net investment income per share: $.27, which covers the quarterly dividend of $.2475 paid in monthly installments.
Net Asset value per share: $9.61
Exchange Traded Bond: I have a small ball position in a GLAD exchange traded senior unsecured bond. Gladstone Capital Corporation 7.75% Notes due 2028 (GLADZ) Par value is $25.
Last Elimination: Item # 5.A Eliminated GLAD - Sold 50 at $9.11 (12/2/2018 Post)(profit snapshot = $1.38)-Item # 1.A. Bought 50 GLAD at $9.09-Used Commission Free Trade (6/7/18 POST)
Goal: A total return in excess of the dividend payments before any ROC adjustment to the tax cost basis (avoids double counting).
B. Added to FSCO - Bought 5 at $5.67:
Quote: FS Credit Opportunities Corp. Overview - Leveraged CEF
Cost: $28.35
Investment Category: Monthly Income Generation
Sponsor's website: FSCO-FS Investments
SEC Filing - Investments as of 9/30/23
SEC Filed Shareholder Semiannual Report for the period ending 6/30/23
Average cost per share: $5.77 (55 shares)
Dividend: Monthly at $.057 per share ($.684 annually), last raised from $.04945 effective for the July 2023 payment. With the rise in short term rates, the fund earns more net income that allowed it to raise the dividend payment rate. A cut in the dividend would naturally follow when short term rates decline sufficiently that NII per share no longer covers the current monthly dividend.
The coupons for loans that float at spreads to short term rates like the 3 month SOFR will be extremely sensitive to changes in the FF rate.
FSCO Dividend History | Nasdaq
Yield at AC : 11.85%
Last Ex Dividend: 2/21/24 (owned 50 as of)
Data Date of 2/22/24 Trade:
Closing Net Asset Value per share: $6.98
Closing Market Price: $5.68
Discount: -18.62%
Sourced: FSCO-CEF Connect (Click "Pricing Information" tab)
I have nothing further to add to my recent discussion: Item # 2.E. Started FSCO - Bought 50 at $5.78 (2/2/24 Post)
C. Added to BRT - Bought 5 at $15.95; 5 at $15.58:
Quote: BRT Apartments Corp. (BRT)- Apartment REIT
Cost: $157.63
Management: Internal
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Website: BRT Apartments Corp.
Properties | BRT Apartments | REIT
Last Discussed: Item # 1.C. Started BRT - Bought 10 at $16.4; 5 at $16.25 (2/15/24 Post) I discussed the 2023 third quarter report in that post. SEC Filed Press Release and Supplemental
New Average Cost per share: $16.11 (25 shares)
Dividend: Quarterly at $.25 per share
Yield at New AC = 6.207%
Last Ex Dividend: 12/18/23
The next earnings report is scheduled for release on 3/13/24.
D. Started NWN - Bought 5 at $35.75:
Quote: Northwest Natural Holding Co. (NWN)
On the day of purchase, the stock closed at $35.85, down $3.93 or 9.83% in response to the 2023 4th quarter earnings report that missed expectations.
Cost: $178.73
This is my first purchase.
NWN is primarily a natural gas distributor headquartered in Portland, Or. "It owns NW Natural Gas Company (NW Natural), NW Natural Water Company (NW Natural Water), NW Natural Renewables Holdings (NW Natural Renewables), and other business interests."
The distribution business provides natural gas to approximately 2M in Oregon and southwest Washington.
The water business is not material. There are about 73,000 meters. The customers are scattered in Pacific Northwest, Arizona and Texas. NWN closed on 4 acquisitions last year.
NWN Analyst Estimates | MarketWatch
Dividend: Quarterly at $.4875 per share ($1.95 annually), last increased from $.485 effective for the 2023 4th quarter payment.
The dividend has been increased for 68 consecutive years. The increases have been so miniscule that I would not call them increases.
In 2014, the quarterly rate was $.46 per share. I would only call this dividend history as a positive only because the rate has not been cut and the yield at 5.45% at my cost is okay.
Yield at $35.75: 5.45%
Last Ex Dividend: 1/30/24
Last Earnings Report (Q/E 12/31/23): SEC Filed Press Release
2023 Net Income of $93.9M or $2.58 per share, up from $2.54 in 2022.
2023 4th quarter E.P.S. = $1.21, down from $1.36
Affirmed long term earnings per share growth rate target of 4% to 6%, compounded annually, from 2022 through 2027.
Guides 2024 to $2.20 to $2.4, down from 2023 "primarily because of regulatory lag". For utility companies, capital expenditures are made before a regulatory commission approves adding the costs to the rate base.
The company has increased its dividend for 68 consecutive years.
E. Added 5 AY at $18.25; 5 at $17.9:
Quote: Atlantica Sustainable Infrastructure PLC (AY)
Cost: $180.76
Website: Atlantica- Sustainable Infrastructure
AY SEC Filings (foreign issuer forms)
Corporate Presentation Nov-2023.pdf
Last Discussed: Item # 1.B. Added to AY - Bought 5 at $19; 5 at $18.53 (2/9/24 Post)
Last Substantive Discussion: 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. SEC Filing
New Average cost per share: $19.03 (35 Shares)
Dividend: Quarterly at US$.445 per share ($1.78 annually)
Yield at AC = 9.35%
Last Ex Dividend: 11/29/23
Last Earnings Report (Q/E 12/31/24): Released on 3/1/24. So far today, there is almost no response to this report, up or down.
SEC Filed Earnings Release and SEC Filed Slide Investor Presentation
 |
| Depreciation is a major noncash expense |
2023 Revenues: $1.099+B
Net Income: $43.38M or $.37 per diluted share, up from a loss of 9 cents per share in 2022.
2023 Cash Available for Distribution ("CAD"): $235.74M or $2.03 per share, which exceeds the annual dividend payment per share.
2023 4th Quarter CAD: $51.576M or $.44 per share.
Maximum Position: 100 shares
F. Restarted WEC - Bought 2 at $78.99; 1 at $77.31; 1 at $76.59:
 |
| Shows Prior Sale This Account at $97.04 |
Quote: WEC Energy Group Inc. - Utility Holding Company
Cost: $311.88
WEC Analyst Estimates | MarketWatch
SEC Filed Investor Update February 2024 4.7M retail customers in Wisconsin, Minnesota and Michigan.
Last Discussed: Item # 1.D. Eliminated WEC in 2 Taxable Accounts - Sold 7 at $96.45 and 3+ at $97.04 (2/3/22 Post)(profit snapshots = $129.44). I would attribute almost all of the price decline since those sales to an overvaluation reset, an unfavorable rate decision by the Illinois Commission, and the rise in interest rates.
Average cost per share: $77.97
Dividend: Quarterly at $.835 per share ($3.34 annually), last raised from $.78 effective for the 2024 first quarter payment.
Yield at $78.99 = 4.28%
Last Ex Dividend: 2/13/24
Last Earnings Reports (Q/E 12/31/23): SEC Filed Earnings Press Release
Non-GAAP 2023 E.P.S. $4.63, up 4% from 2022
4th Quarter Non-GAAP E.P.S. $1.1
Both the 2023 and 4th quarter Non-GAAP E.P.S. excludes a non-cash charge of 41 cents per share relating to the Illinois Commission disallowing certain capital expenditures to be included in the rate base. That decision is discussed in a Fitch bond report. Fitch Affirms WEC Energy Group's IDR; Outlook Stable Illinois represents about 17% of WEC's asset base.
2023 consolidated revenues: $8.9B, down $704.4M from 2022 (mostly weather related)
Analyst Reports (available to Schwab customers):
Morningstar (2/1/24): 4 stars with a fair value of $96 and a narrow moat
Argus (2/7/24): Buy with a $106 PT.
S&P (2/7/24): 3 stars with a 12 month PT of $86
G. Added To TGNA - Bought 5 at $14.15; 5 at $13.7:
Cost: $139.2
"With 64 television stations in 51 U.S. markets, TEGNA is the largest owner of top 4 network affiliates in the top 25 markets among independent station groups, reaching approximately 39 percent of all television households nationwide. TEGNA also owns leading multicast networks True Crime Network, Twist and Quest."
TEGNA Inc. Analyst Estimates | MarketWatch
Investor Relations | TEGNA Inc.
Last Discussed: Item # 1.A. Started TGNA - Bought 10 at $14.52; 10 at $14.32 (2/15/24 Post) I discussed the 2023 third quarter report in that post. TEGNA Inc. Reports Third Quarter 2023 Results and Provides Fourth Quarter Guidance
New Average cost per share: $14.25 (30 shares)
Dividend: Quarterly at $.11375 per share ($.455 annually), last raised from $.095 per share effective for the 2023 4th quarter payment.
TGNA Dividend History | Nasdaq
Yield at New AC = 3.19%
Next Ex Dividend: 3/7/2024
Last Earnings Report (Q/E 12/31/23): Released on 2/29/24 after purchase.
GAAP E.P.S. = $.40
Non-GAAP E.P.S. = $.43
Revenues: $725.854M, down from $917.13M in the 2022 4th quarter.
Revenues declined primarily due to the 2022 midterm election cycle advertising boost. There will be a bigger boost in 2024 which includes a Presidential election.
Subscription revenue declined 9% primarily due to a temporary disruption of service with a distribution partner that was resolved on 1/13/24. Those disputes involve cable carriage fees for local network stations.
Free cash flow was $130M in the quarter.
Cash and Cash Equivalents as of 12/31/23: $361M
The company expects to generate $900M to $1.1B in free cash flow in 2024 and 2025 combined.
Sale of Interest in BMI: On 2/8/24, Tegna completed the sale of its interest in BMI (Broadcast Music) to a shareholder group led by New Mountain Capital for approximately $153M in pre-tax proceeds (see page 80 of the 2023 Annual Report and Earnings Press Release for the 4th Q.). I do not currently have the net profit number.
H. Added to KRG - Bought 5 at $20.9:
Quote: Kite Realty Group Trust (KRG) - Retail REIT
Cost: $104.5
KRG "is a real estate investment trust (REIT) headquartered in Indianapolis, IN that is one of the largest publicly traded owners and operators of open-air shopping centers and mixed-use assets. The Company’s primarily grocery-anchored portfolio is located in high-growth Sun Belt and select strategic gateway markets."
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Last Discussed: Item # 1.A. Added to KRG - Bought 5 at $21.25 (1/26/24 Post)
Last Substantive Discussion: Item # 2.F. Started KRG - Bought 5 at $22.49; 5 at $22.1 (1/6/24 Post) I discussed the 2023 third quarter report in that post. SEC Filed Press Release and Supplemental
New Average cost per share: $21.68 (20 shares)
Dividend: Quarterly at $.25 per share
Yield at New AC: 4.61%
Last Ex Dividend: 1/4/24 (owned 5 as of)
Last Earnings Report (Q/E 12/31/23):
SEC Filed Press Release and Supplemental
FFO: $111.1M or $.50 per share
Net Income to FFO:
The noncash depreciation and amortization expense of $103.119M is the major add back to net income when calculating funds from operation.
Leased Occupancy: 94%
Economic Occupancy at Year End: 91.3%
2024 FFO Guidance: $2-$2.06
Debt Ratings: Baa3/BBB-
Fitch rates the SU debt at BBB. Fitch Rates Kite Realty's Senior Unsecured Notes 'BBB' (1/16/24)
Last Bond Offering (1/2024): Prospectus for 5.5% SU Note maturing in 2034.
I. Added to BNL - Bought 2 at $14.86:
Quote: Broadstone Net Lease Inc. (BNL) - Internally Managed REIT
Cost: $29.72
As of 12/31/23, BNL "owned a diversified portfolio of 796 individual net leased commercial properties with 789 properties located in 44 U.S. states and seven properties located in four Canadian provinces, comprising approximately 38.3 million rentable square feet of operational space. As of December 31, 2023, all but two of our properties were subject to a lease, and our properties were occupied by 220 different commercial tenants, with no single tenant accounting for more than 4.1% of ABR. Properties subject to a lease represent 99.4% of our portfolio's rentable square footage. The ABR weighted average lease term and ABR weighted average annual minimum rent increase, pursuant to leases on properties in the portfolio as of December 31, 2023, was 10.5 years and 2.0%, respectively."
Last Discussed: Item # 1.C. Added to BNL - Bought 5 at $14.08; 5 at $13.08 (11/4/23 Post) I discussed the 2023 third quarter report in that post. SEC Filed Press Release and Supplemental
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
New Average Cost per share: $14.97 (55+ shares)
Dividend: Quarterly at $.285 per share ($1.14 annually)
BNL Dividend History | Seeking Alpha
Yield at New AC = 7.615%
Next Ex Dividend: 3/27/24
Last Earnings Report (Q/E 12/31/23):
SEC Filed Press Release and Supplemental (debt and interest rate swaps discussed at pages 11, 13-17)
GAAP E.P.S. = $.03
FFO per share: $.39
AFFO per share: $.36
2023 AFFO per share: $1.41, up from $1.4 in 2022
2024 AFFO per share Guidance = $1.41
The flat AFFO guidance reflects selling 75 healthcare properties, which is ongoing as discussed below. There will be a lag between receiving the proceeds and reinvesting into newly acquired properties that generate rental income.
Reconciliation Net Income to AFFO:
The REIT is in the process of selling its clinically oriented healthcare properties. The company has identified 75 healthcare properties that it wants to sell representing approximately 11% of its annualized base rent.
As of the date of this earnings press release, the company has "executed contracts on 37 healthcare properties for approximately $253.0 million at a weighted average cash capitalization rate of 7.9%, representing a $0.8 million gain over original purchase price. The properties represent approximately $19.9 million or 5.1% of our December 31, 2023 ABR, 28.7% of our healthcare portfolio, and have a weighted average remaining lease term of 4.7 years. We anticipate the transactions will close during the first quarter of 2024."
Occupancy: 99.4%, page 21 Supplemental
Properties: 796
Top 20 Tenants:
J. Added $50 to FCVSX at $32.24:
Quote: Fidelity Convertible Securities Fund Overview
Sponsor's website: FCVSX-Fidelity Investments
Expense Ratio: .75%
FCVSX – Morningstar (currently rated 4 stars)
1 Year Ordinary Dividend History: Paid Quarterly
Capital Gain Distributions - Paid Annually
K. Added to CTO - Bought 1 at $16.49:
Quote: CTO Realty Growth Inc. (CTO) - Externally Managed REIT
Portfolio Summary: Square feet in thousands.
Occupied: 90.3%
"On February 16, 2024, the Company completed the sale of its remaining subsurface oil, gas, and mineral rights totaling approximately 352,000 acres in 19 counties in the State of Florida (“Subsurface Interests”) for gross proceeds of $5.0 million. As part of the Subsurface Interests sale, the Company entered into a management agreement with the buyer to provide ongoing management services for an annual base management fee of $100,000 and the potential to earn additional incentive fees if certain conditions are met."
2024 Guidance: AFFO per share $1.7 to $1.78
Last Discussed: Item # 1.A. Added to CTO - Bought 15 at $17.2; 5 at $17.1 (12/16/23 Post)
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Stock Split: CTO Realty Growth Announces Three-For-One Stock Split (4/27/22)
New Average Cost per share: $17.7 (112+ shares)
Dividend: $.38 per share ($1.52 annually)
Yield at AC = 8.59%
Next Ex Dividend: 3/13/24
Last Earnings Report (Q/E 12/31/23):
Core Diluted FFO per share: $.48
AFFO per share: $.52
Net Income to AFFO per share:
Sold 6 properties for $64.2M generating a total gain of $3.2M
Repurchased 62,015 common shares at an average cost of $15.72.
CTO provides management service to another publicly traded REIT called Alpine Income Property Trust Inc. (PINE) and has a significant equity position in PINE.
2. Small Ball Sells:
I am using the rally this year to sell a few underperforming stock positions.
A. Eliminated REYN - Sold 40+ at $29.64:
Proceeds: $1,192.5
The two main product lines are Hefty trash bags and Reynolds aluminum wrap. Some other products are sold using those trade names.
Brands | Reynolds Consumer Products
REYN Analyst Estimates | MarketWatch
Profit Snapshot: +$60.56
Last Discussed: Item # 2.H. Added to REYN - Bought 5 at $25.7 (11/11/23 Post) I discussed the 2023 third quarter report in that post. SEC Filed Press Release
Dividend: Quarterly at $.23, last raised from $.22 effectively for the 2020 4th quarter which I view negatively.
REYN Dividend History | Nasdaq
Last Ex Dividend: 2/14/24 (owned as of)
Last Earnings Report (Q/E 12/31/23):
Comparisons are to the 2022 4th quarter.
E.P.S. $.65, up from $.51
Revenues: $985M, down from $1.065B
2023 E.P.S. $1.42, up from $1.23
Earnings were negatively impacted by input cost inflation in 2022.
Guidance: 2024 E.P.S $1.57 to $1.65
Last Sell Discussion: Item # 4.F. Eliminated Duplicate REYN in Schwab Taxable Account - Sold 20+ at $32.55 (12/6/22 Post)(profit snapshot = $95.96)
REYN Realized Gains to Date: $173.95
B. Eliminated NTB - Sold 19 at $30.02:
Proceeds: $570.39
Sold on the ex dividend date.
NTB Analyst Estimates | MarketWatch
Investor Relations: Butterfield Group
Profit Snapshot: +$111.51
Last Discussed: Item # 4.B. Eliminated Duplicate Position in NTB - Sold 14 at $31.87 (7/29/23 Post)(profit snapshot = $96.14)
Dividend: Quarterly at $.44 per share ($1.76 annually), last raised from $.38 effective for the 2019 third quarter payment.
The Bank of N.T. Butterfield & Son Limited (NTB) Dividend History | Seeking Alpha
Last Ex Dividend Date: 2/23/24 (owned as of)
Last Earnings Report (Q/E 12/31/23): SEC Filed Earnings Press Release and SEC Filed Investor Presentation (slides)
Comparisons are to the 2022 4th quarter.
Diluted GAAP E.P.S. = $1.11, down from $1.26
Diluted Non-GAAP E.P.S. = $1.15, down from $1.27
NIM: 2.73%, down from 2.79%
Core efficiency ratio: 60.5%
NPL Ratio: 1.3%
Charge off ratio: .08%
Core Return on Average Tangible Equity: 25.4% (very good)
Tangible Book Value per share: $19.29, up from $15.92
Repurchased 1.2M shares at an average price of $28.2 per share
Purchased trust assets from Credit Suisse.
Consider to Repurchase: My consider to repurchase price is at less than $25.
Negatives Outweigh the Positives IMO: NIM has traditionally been lower than other banks, the NPL ratio is elevated, E.P.S. is trending down and the efficiency ratio is a bit too high.
C. Eliminated BTMD - Sold 15 at $6.22:
Quote: Biote Corp. (BTMD)
Proceeds: $93.3
Investment Category: Blackjack Hand, part of the Lottery Ticket Basket Strategy.
Profit Snapshot: $18.8
Last Discussed: Item # 3.D. Bought 5 BTMD at $5.07; 5 at $4.76 (1/26/24 Post)
Dividends: None and none expected.
Last Earnings Report: I was not pleased with the updated guidance released after my purchase. I sold into the price pop created by an analyst upgrade.
SEC Filing (preliminary report)
"management expects 2023 revenue and Adjusted EBITDA to be slightly below prior guidance. The Company had previously forecast that revenue and Adjusted EBITDA would be toward the lower end of the previously announced ranges of $190-$200 million and $56-$60 million, respectively. The Company now expects full year 2023 revenue of $185-$187 million and Adjusted EBITDA of $54-$56 million. . . . Expected revenue of $45-$47 million for the fourth quarter of 2023 includes procedure revenue growth of approximately 7% and dietary supplement revenue decline of approximately 15% compared to same period in 2022. The decline in dietary supplement, or nutraceutical, revenue was primarily driven by one of Biote’s larger distributors recently opting to exit the nutraceutical business."
D. Eliminated PFG - Sold 2 at $80.41:
Proceeds: $160.81
PFG Analyst Estimates | MarketWatch
Profit Snapshot: +$84.01
Last Discussed: Item # 1.B. Started PFG - Bought 2 at $38,4 (10/21/20 Post)
Dividend: Quarterly at $.69, last raised from $.67 effective for the 2024 first quarter payment. In the 2014 first quarter, the rate was at $.28 per share.
Last Ex Dividend: 11/30/23
Next Ex Dividend: 3/11/24
Last Earnings Report (Q/E 12/31/23):
Non-GAAP E.P.S. $1.83
PFG SU Bonds: I currently own 2 PFG SU bonds that mature in 2026 which I will hold until maturity.
The main reason for selling this position is that I only owned 2 shares and did not want to buy more at the current price. I did not want to spend time monitoring the company based on those considerations. I may restart a position when and if the price sinks somewhere south of $60, and I am comfortable buying more shares than just 2.
3. Corporate Bond Purchases:
A. Bought 2 Verisign 5.25% SU Maturing on 4/1/25 at a Total Cost of 99.761:
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Issuer: VeriSign Inc. (VRSN)
VRSN Analyst Estimates | MarketWatch
SEC Filed Earnings Press Release for the Q/E 12/31/23
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa3/BBB
YTM at Total Cost: 5.472%
Current Yield at TC = 5.26%
This is the next SU bond to mature, which is something that I check and place some value on.
B. Bought 2 Essex LP 3.5% SU Maturing on 4/1/25 at a Total Cost of 97.976:
%203.5%25%204:1:25.png)
Issuer: Operating entity for Essex Property Trust Inc. (ESS) who guarantees the notes:
Essex SEC Filed Earnings Report for the Q/E 12/31/23
FINRA Page: Bond Page | FINRA.org
Credit Ratings: Baa1/BBB+
YTM at Total Cost: 5.426%
Current Yield at TC = 3.57%
C. Bought 2 Trimble 4.75% SU Maturing on 12/1/24 at a Total Cost of 99.407:
%204.75%25%2012:1:24.png)
Issuer: Trimble Inc. (TRMB)
TRMB Analyst Estimates | MarketWatch
This is the next SU note that matures.
SEC Filed Earnings Press Release for the Q/E 12/31/23
FINRA Page: Bond Page | FINRA.org
Credit Ratings: Baa3/BBB-
YTM at Total Cost: 5.545%
Current Yield at TC = 4.778%
Last Bond Issuance (2/23): Prospectus for $800M SU Maturing in 2033
D. Bought 2 UNUM 3.875% SU Maturing on 11/5/25 at a Total Cost of $97:
%203.875%25%2011:5:25.png)
Issuer Unum Group (UNM)
I have eliminated my common stock position.
UNM Analyst Estimates | MarketWatch
UNM SEC Filed Earnings Press Release for the Q/E 12/31/23
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa3/BBB
YTM at Total Cost: 5.767%
Current Yield at TC = 3.995%
E. Bought 2 CMS Energy 3.6% SU Maturing on 11/15/25 at a Total Cost of 96.828:
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Issuer: CMS Energy Corp. (CMS) - Utility Holding Company
CMS Analyst Estimates | MarketWatch
CMS SEC Filed Earnings Press Release for the Q/E 12/31/23
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa2/BBB
YTM at Total Cost: 5.565%
Current Yield at TC = 3.718%
I had a 3.875% SU bond issued by CMS mature on 3/1/24:
A number of operating subsidiaries of utility holding companies issue first mortgage bonds.
4. Treasuries Bought at Auction: $16,000 in principal amount.
A. Bought 10 Treasury Bills at the 2/28/24 Auction:
%207:2:24.png) |
| Fidelity Account |
%207:2:2024%20Sch%20.png){kind=small} |
| Schwab Account |
119 Day Bill
Matures on 7/2/24
Interest = $172.72
Investment rate: 5.391%
B. Bought 2 Treasury Bills at the 2/26/24 Auction:
%208:29:24%20.png){kind=small}
182 Day Bill
Matures on 8/29/24
Interest: $51.87
Investment Rate: 5.34%
C. Bought 1 Treasury Note at 2/26/24 Auction:
%202:28:26%20.png){kind=small}
2 Year Note
Matures on 2/28/26
Coupon: 4.625%
Yield with OID = 4.691%
D. Bought 3 Treasury Bills at the 2/29/24 Auction:
%204:30:24.png){kind=small}
56 Day Bill:
Matures on 4/30/24:
Interest: $24.66
Investment rate: 5.403%
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.
Does the PCE data mean anything to you? It looks like inflation is slowing overall. That the market is thrilled.
ReplyDeleteExcluding shelter 1.8% is below the 2% goal.
I don't see the FED reducing rates. Or maybe .25% in a few months. There's still so much liquidity that inflation isn't slowing to a dangerous crawl but is at the right setpoint. So it'd be better to keep the status quo and not try to go back down much.
Land: There was a meaningful uptick in the month-to-month PCE price indexes. The core increased .4% to month-to-month, up from +.1% in the prior two months.
DeleteThe CME FedWatch tool has a 75% chance of a .25% cut at the June meeting. For that to happen, the month-to-month increases will need to return to less than .3%.
The economy is not yet showing signs of a recession developing, though manufacturing remains somewhat weak. That takes the pressure off for a rate cut.
I view a cut before the June meeting as highly unlikely which is no change from what I have been saying.
Reading the FF signals sent by T Bills yields, there is close to a zero percent change of a cut within six months which differs from the FF futures contracts that formed the basis of the CME probabilities. I am increasing my purchase of the 6 month bill next Monday to $5,000 from $2,000 last Monday, see Item #4.B.
I missed the uptick in PCE. But sounds like my expectations are in line with the data evidence.
DeleteCurrently I'm having fun watching the rally's effect on my networth. Still frustrated that I'm mostly in cash in the Vang Roth IRA and haven't been buying. Dumb. And haven't converted the 401k yet to Roth.
I'm not totally sure why, but this is an enthusiastic rally for the indices. I'm up 18% as of yesterday and the indices seem to range from Oct 22 (my last count) up 20-23%. So a little low but not bad.
I'd sell off the top, but there's no indication yet that it won't climb more.
Land: Currently, 57% of my taxable account at Vanguard is in the MM VMRXX that has a 5.28% 7 day yield.
Deletehttps://investor.vanguard.com/investment-products/mutual-funds/profile/vmrxx
I am content with the $742 in dividends paid in February.
One of my Roth IRA accounts is at Vanguard which has about 24% in VMRXX.
The percentage allocation in VMRXX is rising in part due to proceeds received from maturing CDs, bonds and treasuries which I am mostly keeping in the MM fund. When I become more confident that short term rates are about to head down meaningfully, I will look to use some idle funds to buy bonds that mature in the 1 to 3 year time period. I will want more in yield even then than I am receiving from VMRXX.
Thanks!
DeleteI'd be happy with VMRXX's yield for 1-3 years :).
Hi SOUTH GENT, i am a reader of ur blog and love ur short youtube musings! I had a tax question; i am NOT asking for advice. I have been laddering in bonds and fixed income. I have been buying treasuries also which pay on the surrender date of the bond, (Not sure if some treasuries pay quarterly) not during the year as a corporate bond would do; I wondered if a bond that matures over a year like a treasury at surrender, is taxed yearly at a phantom rate or is it actually at a lower tax rate than a bond that pays quarterly income? thank you I hope this is clear!
ReplyDeleteI may have confused u a little; what i wanted to know if a treasury matures in one year, is it taxed as interest income or at the capital gains tax rate? thanks
ReplyDeleteG: Treasury bills (1 month to 1 Year) are sold at discounts to par value. The difference between the amount paid and the par value is classified as interest.
DeleteTreasury bills do not have coupons, When held to maturity, the interest is taxed in the year that the bill matures.
If you bought a 1 year treasury bill at the next auction, and held until it matures, the interest would be taxable in 2025. The same would be true for a 6 month treasury bill purchased at the first auction in July 2024.
Treasury notes (2-10 year maturities) and bonds (more than 10 years) have coupons and pay semi-annually. Interest is taxable in the year received. Selling a treasury note or bond prior to maturity will require the buyer to pay the seller accrued interest which would be taxable in the year received.
$1,000 par value corporate bonds that I own have coupons and most pay semiannually. A few pay monthly or quarterly. Interest is taxable when received.
If a note or bond is sold for a profit before maturity, the "profit" may be classified as interest rather than a capital gain. The 1099 that you received will show how that amount is classified. I really do not have any specialized knowledge of why that happens, but will see on my 1099 that capital gains from corporate notes will be classified as "market discounts" and taxed as interest. I just download the information into TurboTax. Last year, I had $745 in market discounts that were treated as interest rather than capital gains. TurboTax has that amount in my Interest section in Schedule B, not in Schedule D which has the capital gains.
Another important item is accrued interest that is paid to sellers when buying a bond in the secondary market. This is a complicated topic. On page 202 of my Fidelity form from last year, I paid $2,354.47 in accrued interest to those selling bonds to me. That amount is deducted in a separate line item in Schedule B since the sellers have to pay taxes on that part of the interest included on my 1099. Many accountants have to learn about this matter and oddly are unaware of how accrued interest paid to sellers is accounted for on the tax forms.
I would add that I had to take a tax course. After attending the first class, and listening to a professor talk in a monotone on a very boring subject, I did not return until the final exam, having reviewed only J.K. Lasser on taxes rather than the case book used by the professor and did okay.
Accrued Interest paid to bond sellers:
ReplyDeletehttps://www.taxact.com/support/1191/2023/form-1099-int-accrued-interest?hideLayout=False
thank u very much!
DeleteAnyone buying bonds in the secondary market needs to use Turbotax or an accountant. If the accountant does not know about how to account of accrued interest paid to bond sellers in Schedule B, then that person is probably going to have many other issues. I found that to be the case for a family member and a CPA that I used for 1 year who charged me far too much, around $1,800, and that was several years ago. I ended up correcting items like accrued interest paid to bond sellers which he did not deduct, foreign currency trades, and more. I ended up spending more time with him than I would doing my own return using Turbotax Deluxe which costs $56 for an Amazon download.
ReplyDeleteI participated in the 3 and 6 month treasury bill auctions today that resulted in investment rates of 5.384% and 5.313% respectively. The current FF range is 5.25 -5.5%. Both yields are near the midpoint of that range.
ReplyDeleteThe 6 month T Bill IR is not consistent IMO with a 25 basis point cut in the FF rate on or before the June meeting. The 6 month bill matures on 9/5/24.
Maybe the 7 basis point lower yield for the 6 month bill is signaling something like a 30%-40% chance for a 25 basis cut in July.
The CME FEDWatch Tool currently has 84.9% probability of at least a 25 basis point cut on or before the July 31 meeting.
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
There is no FED meeting in August.
The odds for a cut at the June meeting have been going down and currently stand at 67% for a least a 25 basis point cut.
So the data (rates) back up a more conservative expectation on rate cuts. Interesting!
DeleteThis rally is unreal. It's a straight wall up. For about 4-5 months now.
ReplyDeleteWhat to do to protect the downside that has to be coming....
Land: Alan Greenspan coined the phrase Irrational Exuberance in a December 2016 speech.
Deletehttps://www.federalreserve.gov/boarddocs/speeches/1996/19961205.htm
The exuberance phase of the stock market was only just getting started then. The bubble would not pop until 2020. So it is not possible to time the peak levels and the onset of a major bear market. Predicting the future is just not possible.
My strategy is just to gradually lighten up on my stock allocation during the exuberance phase, and to partially deploy the proceeds into dividend paying stocks that yield more than 4% that are within what I view a rational valuation range given my outlook on inflation and interest rates. I would describe this approach as reaching the desired comfort level given my conservative nature when it comes to taking investment risks now.
I have been selling regional bank stocks that pay decent dividends because I have soured on the sector, at least for now. I will be discussing several eliminations in my next post.
Switching to div stocks is a way to weather a downturn whenever it comes.
DeleteHopefully the VIX model will have a pattern that's followed again. So the VIX above 20 is a starting indicator to get more cautious. Then after the spike and entering unstable VIX, there'll be a rally (not necessarily all the way back up).
This exuberance is still new. FOMO doesn't wear off very easily.
Land: The VIX is in the most stable pattern which is consistent movement below 15. The Model continues to flash a green light for stocks.
DeleteA movement above 20 is just an Alert as defined in the model. It requires an inquiry into what has changed the pattern that hopefully leads to the identification of factors causing the spike higher. Then an assessment can be made whether they are temporary or the beginning of some fundamental change that will negatively impact the economy. It is only the Trigger Event that terminates the Stable Vix Pattern and that requires a multi-day spike in the high 20s or higher. The Trigger Event in August 2007 led me to reduce my stock allocation during the Recovery Period that followed that lasted into October 2007.
Avangrid Inc. (AGR)
ReplyDelete$36.23 +$4.15 +$12.94%
Last Updated: Mar 7, 2024 at 10:51 a.m. EST
https://www.marketwatch.com/investing/stock/agr?mod=search_symbol
AGR is a utility holding company. The Spanish company Iberdrola, S.A. owns 81.6% of the common stock and has made an offer to acquire the remaining shares $34.25 in cash.
https://www.sec.gov/Archives/edgar/data/1634997/000119312524061291/d764735dex991.htm
The current stock price reflects a current opinion that the offer may be sweetened to get the deal done.
I had a small ball position in AGR and eliminated it by selling 15+ shares at $36.22. I will just briefly mention that sale in my next post.
I still own several AGR senior unsecured bonds and will discuss in my next post buying 2 more on 3/4 that mature on 12/1/2024. The YTM at my purchase price was 5.53%
https://www.finra.org/finra-data/fixed-income/bond?cusip=05351WAA1&bondType=CA
SG I just saw your YOUTUBE comments on the trump/ Biden polls and ur Tenn vote primary. My ? if if it is Trump vs Biden #1 will an improved economy by NOV ie disinflation; mortgage and FF rates down , do u think this will improve Biden's chance to win? #2 i read that if indicted previously , a person can be tried during the 60 day period prior to a national election; I don't know if if this is true or not and would appreciate your thoughts. thanks
ReplyDeleteG. There is no DOJ policy that would prevent a Trump trial before the election. There is a DOJ policy that no overt "investigative" steps will be done 60 days prior to an election.
Deletehttps://www.cnn.com/2024/02/28/politics/fact-check-trump-justice-department-rules-prosecution-during-campaign/index.html
Trump is just lying about the DOJ policy. Psychopaths do not feel shame about lying all the time about almost everything.
However, I doubt that any judge would schedule a trial within 3 months of the election.
If Jack Smith would strip down the Florida documents case to just obstruction of justice, which is one IMO most likely to result in Trump being convicted of a felony, a trial could happen in a few weeks.
Smith has not indicated an inclination to narrow the scope of the case to something that is easy for a jury to understand- a deliberate failure to comply with a grand jury subpoena demanding the production of documents marked as classified and an attempt to destroy evidence relating thereto. Judge Cannon will much things up for Smith and may have to be removed from the case by the 11th Circuit.
Biden is not getting any credit now for a good economy. I do not anticipate that will change among those who view him unfavorably and have indicated an intent to vote for Trump.
There is a permanent disconnect among millions of voters between their perception of the economy and the actual economy as it is. Part of that disconnect results from those persons accepting Trump's reality creations as facts.
Inflation will be coming down before the election, but all that will be remembered is the high inflation numbers in 2021-2022. The response to lower inflation numbers, if known by a Trump voter, will be that prices are not going down from elevated levels but only increasing at a slower rate.
Those same voters will give Trump credit for low inflation in the 2025 first quarter even if was not sworn in until late January. Trump inherited a good economy in 2017 but that would not be known if a person paid attention and actually believed Trump's characterization.
Inflation numbers have been juiced much higher than they really are due to the weighting of owners equivalent rent in CPI which is not an expense that anyone pays.
I get it!! thanks for your great videos and blog!
DeleteThanks too for all the information.
DeleteFidelity released its first iteration of my 1099 and tax information form which expanded to 236 pages for 2023. The accrued interest paid to bond sellers is on pages 232-233 near the end. Quantity of pages does not necessarily translate into quality.
ReplyDeleteWhen I download the Fidelity information using TurboTax, there is no accounting for that accrued interest paid to bond sellers. The numbers have to be added manually in TurboTax for each broker where I paid that interest. TurboTax will then total up the amounts and create a line item titled "Accrued Interest" in Schedule B that will deduct the total accrued interest paid to bond sellers from my interest income.
Accrued interest is paid for bond purchases in the secondary bond market. The buyer will pay the accrued interest to the seller who has to pay the tax on it. When the buyer receives the semiannual payment, it will be the entire amount which includes the accrued interest paid to the seller. You can confirm that by looking at your 1099. That is why the buyer deducts the accrued interest paid to the seller, otherwise the buyer would in effect be paying a tax on interest that the seller received when the bond was bought and the seller owes the tax on that amount which would be included in their 1099.
I was amazed on how 2 CPAs were unaware of how to account for accrued interest paid to bond sellers, and did not account for it until I corrected them savings several hundred dollars in taxes. My accrued interest paid in my Fidelity account last year was over $2,100 and I have two other taxable accounts with those payments.
One of the CPAs was used for 1 year by me and the other by a family member.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2024/03/agr-bhb-cfg-eprprc-ffbc-lgnd-mbwm.html