ADCPRA, APA, EAI, ICMB, IIPR, IP, MAA, MEGI, PFE, RYLD

Economy: 

’Various’ Fed officials were willing to hike interest rates if needed - MarketWatch (subscription publication) I would expect FED members to say that interest rates may be increased if it "became appropriate". The fact that this statement was mentioned in the context of concerns expressed about inflation did cause an anxiety attack among the Stock Jocks last Wednesday that carried over into Thursday. 

Earlier in the year, investors were expecting three 25 basis point cuts in the federal funds (FF) rate. That consensus was reinforced by the FED's dot plot released in its March 2024 projection materials. The expectation now, as measured in the CME FedWatch tool, is that there will be no more than 1 cut before the December 2024 meeting. CME FedWatch Tool - CME Group The yields for treasury bills signal no cut by that meeting.  

Minutes of FED Meeting 4/30 to 5/1/24 "Participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the Committee's 2 percent objective. The recent monthly data had showed significant increases in components of both goods and services price inflation. In particular, inflation for core services excluding housing had moved up in the first quarter compared with the fourth quarter of last year, and prices of core goods posted their first three-month increase in several months.. . . Participants noted that they continued to expect that inflation would return to 2 percent over the medium term. However, recent data had not increased their confidence in progress toward 2 percent and, accordingly, had suggested that the disinflation process would likely take longer than previously thought. . . . Participants discussed maintaining the current restrictive policy stance for longer should inflation not show signs of moving sustainably toward 2 percent or reducing policy restraint in the event of an unexpected weakening in labor market conditions. Various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate." (emphasis added)

Existing-Home Sales Retreated 1.9% in April The inventory of unsold homes rose 9% from the prior month and down 1.9% from April 2023. The median home sales price increased by 5.7% to $407,600 over the 12 month period ending in April 2024. (Discussed at  Existing home sales slip in April)

New home sales in April declined by 4.7% from the revised March number and were down 7.7% compared to April 2023:

Target Earnings Miss as Consumers Pull Back. The Stock Tumbles. - Barron's (subscription publication) Revenues and same store sales declined by 3.1% and 3.7% respectively compared to the 2023 first quarter. TGT SEC Filed Earnings Press Release Consumers spent less on discretionary purchases like apparel. Part of TGT's problem is that it is losing market share to lower cost competitors like WMT that reported first quarter revenue growth of 6%. WMT SEC Filed Press Release 

Most Americans falsely think the U.S. is in recession, poll shows Biden is blamed for causing the recession that clearly does not exist. The level of ignorance is stunning. 

US Durable Goods Orders rise 0.7% in April vs. -0.8% expected

Soaring debt and deficits causing worry about threats to the economy and markets This will not end well. 

+++

Allocation Shifts Discussed in this Post: 

Treasury Bills Purchased at Auction: $10,000 in principal amount 

Corporate Bonds: $14,000 in principal amount 

CDs: $1,000

Treasury Notes Purchased in the Secondary Market: $3,000 in principal amount

Principal Amount of Maturing Securities in June 2024: $123,000

Outflow Common Stocks: -$2,031.52

(Consisting of $2,674.72 in proceeds minus $643.2 in purchases)

Most of the purchase amount was devoted to starting a position in APA, an E&P company. 

Outflow Stock Funds: -$214.32

Outflow Common Stocks/Stock Funds: -$2,245.84

REIT Preferred Stock: +$170.96

Exchange Traded First Mortgage Bond (EAI): +$536.2

2024 Outflow Stocks/Stock Funds: -$29,783.01 

Treasury Yield Curve May 2025:

The 6 month treasury bill yield is inconsistent with any cut in the federal funds (FF) rate. The 1 year T bill yield is inconsistent with a more probable than not cut on or before May 2025. 

The CME FedWatch Tool, which uses FF futures contracts to estimate probabilities now has it more likely than not that there will be no rate cut on or before the September meeting. 

Ten Year TIP Breakeven Inflation Rate (as of 5/23/24) = 2.3%

5 Year TIP Breakeven Inflation Rate: 2.31%

++++++

Trump and His Party : 

RealClearPolitics - Election 2024 - General Election: Trump vs. Biden

‘We’ll See You at Your House:’ How Fear and Menace Are Transforming Politics - The New York Times Trump stokes potential violence from his supporters to achieve his personal political objectives.    

Trump Has Already Sown Doubts About the 2024 Election Results - The New York Times

Trump's NRA Convention Speech Recap - YouTube; Donald Trump's 'Glitch' During NRA Speech Raises Questions Donald froze for over 30 seconds.  

Justice Alito’s Upside-Down Flag - The Atlantic

Republicans Accused of Forging Ballot Signatures in Critical Swing State

Trump's Jersey Shore rally and its big lie as to the crowd size

"Stain on the judicial system": Legal experts slam Judge Cannon after damning Trump ruling released The 86 page ruling by another federal district court judge, Beryl Howell, was just unsealed relating to Evan Corcoran, a Trump attorney who was involved in Trump's compliance with the grand jury subpoena that demanded production of documents marked as classified. The Court found that the attorney client privilege did not attach to documents prepared by Corcoran relating to his interactions with Trump due to the crime exception to that privilege. Court Order.pdf (see, e.g. pages 56-64, and this sentence: "Notably no excuse is provided as to how the former president could miss the classified-marked documents found in his own bedroom at Mar-a-Lago," at page 60.) Evan Corcoran: Trump attorney who became a crucial witness against him has departed legal team; Trump IN WORLD OF TROUBLE after SHOCKING details SURFACE - YouTube

A lot of information remains redacted in that Order. The facts set out in that ruling may explain why Judge Cannon is slow walking decisions on frivolous motions filed by Trump's attorneys. This case, which is not complex at all, should have already gone to trial IMO. If Trump wins in November, and Jack Smith is fired by Trump's AG, then the case may never be tried due to the inexcusable delays created by Judge Cannon.  

Federal judge found ‘strong evidence’ of crimes before Trump was charged in classified documents case 

Trump’s Assassination Fantasy Has a Darker Purpose - The Atlantic (Trump: I "“was shown reports Crooked Joe Biden’s DOJ, in their illegal and UnConstitutional Raid of Mar-a-Lago, AUTHORIZED THE FBI TO USE DEADLY (LETHAL FORCE).")

Trump Campaign Email Asking for Money "BIDEN’S DOJ WAS AUTHORIZED TO SHOOT ME!" and that "Joe Biden was locked & loaded ready to take me out & put my family in danger."

Trump falsely claims Biden, FBI had plan to assassinate him during Mar-a-Lago search - ABC News  GOP lawmakers conflate FBI policy with a Trump assassination attempt Trump and his acolytes are making this false claim based on standard language that is in all FBI search warrants which limits the use of force. The FBI waited to conduct the search at Mar-a-Lago until Trump was out of state, as he knows when he made the claim that Biden and the FBI were trying to assassinate him. The same language was in the Biden search warrant. Lying all the time about almost everything, and repeating the false statements over and over again, works on the intended audience, so Trump will continue doing it daily. That strategy is a path to power in the U.S.  I have discussed that observation many times here:  E.G. The Road to Political Power: Lying Works/Recent Gold and Silver Sales (9/15/2011 Post) 

Supreme Court Justice Alito’s Beach House Displayed ‘Appeal to Heaven’ Flag-The New York Times This flag was carried by many of the insurrectionists on January 6th as shown in photos taken that day. This flag and flying the American flag upside down at his home shortly after January 6th, when taken together, are evidence that Alito supports Trump's claim about a stolen election.  

Justice Alito wrote the opinion, published yesterday, that permitted the South Carolina republicans to engage in racially based gerrymandering. 

Supreme Court approves South Carolina congressional map previously found to dilute Black voting power 

Alito and the other Republican Justices disagreed with the findings of fact made by a panel of 3 district court judges that the gerrymander was based on race, not partisan politics. The findings of fact made by the panel were based on the testimony of witness and documents. Panel Decision.pdf Alioto wrote that those findings of fact were "clearly erroneous". Findings of fact by a lower court can only be set aside by an appellate court using the clearly erroneous legal standard. Clearly Erroneous Standard-Appeals The republicans in South Carolina removed 30,000 black voters living in one county from a competitive district and place them in the sixth congressional district that was already dominated by black voters and represented by James Clyburn.  

My Video: Republican Justices Rubber Stamp Racial Gerrymandering in South Carolina - Alito Wrote the Opinion - YouTube This is another political win given by the Republican Justices to their party. 

My Video: Supreme Court Justice Clarence Thomas: Ethics and Tax Issues - YouTube

Jan. 6 defendant says Trump will protect him - YouTube

++++

Putin and His Servile Orcs: 

Losses ∙ Russia ∙ WarSpotting — documented material losses in Russo-Ukrainian war 

Two, Possibly Three Russian Jets Hit After Drone Strike at Kushchyovskaya Air Base - YouTube

Pentagon: Ukraine hits 14% of Russia's oil output  - Euromaidan Press

Source: Operation Atlantic Resolve Quarterly Report to Congress, January 1, 2024-March 31, 2024.pdf

Russian naval bases at Novorossiysk hit in massive Ukrainian drone attack - YouTube About 1.5M barrels of Russia's oil production passes through Novorossiysk

Ukraine Drones Destroy Russian Jets and Hit Power Station in Crimea - The New York Times (5/17/24)

Update on the Karakurt-Class Ship Tsiklon -- Likely Sunk! (Rescue ships seen in area) - YouTube

Russia's Tuapse oil refinery halted after Ukrainian drone attack, sources say | Reuters; Fire breaks out at oil refinery in southern Russian town of Tuapse - YouTube

Under Relentless Russian Assault, Ukraine Adopts a Defensive Crouch - The New York Times This article describes what happened to the small villages "liberated" by Russia. Besides murdering civilians, Russia turns every building into rubble so that the villagers no longer have anything left. 

Russian missile strike kills 7 civilians in attack on Ukraine's Kharkiv Russia rountinly targets civilians and civilian structures in Ukraine but threatens World War III when and if Ukraine attacks a military target inside Russia. 

China has never recognized Russia's annexation of Crimea. Political status of Crimea - Wikipedia China is using the box that Putin created for Russia to buy energy products cheaply. Putin makes ‘yet another miscalculation’ | Lord Robertson - YouTube

Russia threatens Britain with retaliation if involvement in Ukraine war deepens So Putin will start a war with NATO if a missile supplied by Britain is used by Ukraine to attack a Russian military target, a threat made knowing that Russia has been unable to defeat the Ukrainian army after invading that country in February 2022. The U.K. is a NATO member.   

Speaker Johnson backs call to let Ukraine strike targets in Russia with U.S. weapons

+++

1. Small Ball Buys: 

I am continuing in a net stock liquidation mode.  

A. Added 5 RYLD at $16.54 - Schwab Account: 

Quote:  Global X Russell 2000 Covered Call ETF Buy/Write CEF

Cost: $82.68

"The Global X Russell 2000 Covered Call ETF (RYLD) follows a “covered call” or “buy-write” strategy, in which the Fund buys the stocks in the Russell 2000 Index (at times by exposure to the Vanguard Russell 2000 ETF), and “writes” or “sells” corresponding call options on the Russell 2000 Index."

Investment Strategy: Monthly Income Generation

Sponsor's website: Russell 2000 Covered Call ETF (RYLD)

Expense Ratio: .6%

RYLD Page at Morningstar Rated 1 star. Total return performance has been poor. RYLD – Performance – Global X Russell 2000 Covered Call ETF | Morningstar The five year annual average return through 5/15/24 was at 3.37%. Part of that is due to the underperformance of the Russell 2000 compared to large caps. The 5 year annual average total return of the iShares Russell 2000 ETF was 7.75% through 5/15/24 compared to 15.02% for the S&P 500 ETF.  

New Average cost per share:

Dividend: Monthly at a variable rate

Last Ex Dividend: 5/20/24

B. Added 10 ICMB at $3.27: 

Quote: Investcorp Credit Management BDC Inc. - Externally Managed BDC

Cost $32.7

I am in a hole on this BDC. 

The likelihood of achieving my goal for any BDC purchase, a total return in excess of the dividends paid, is not likely to be realized, but I keep digging the deeper hole, nonetheless. 

The only way to achieve this objective would be to make unreasonable and irrational forecasts about the future including, but not limited to all current nonaccrual loans paying off in full at maturity and resuming interest payments soon, no new  nonperforming loans for several years, and a far better than expected realized gains from equity positions.

Shareholders would probably be better off with a total liquidation of assets now and lumping the proceeds into 1 final dividend payment. 

IMO, there is not likely to be a long term benefit to shareholders from the current managers, who do benefit through generous compensation which is why they will continue managing the assets. 

ICMB SEC Filings 

Website: Investcorp Credit Management BDC, Inc.

10-Q for the Q/E 3/31/24 A summary of investments starts at page 5.  A loan with a (9) is on nonaccrual. 

2023 Annual Report for the F/Y Ending 6/30/23 (Risk factor summary starts at page 27 and ends at page 55)

Investment Category: Lottery Ticket 

I took snapshots of the nonaccrual loans where some meaningful value is still assigned to the loan: 

Klein Hersh/ cost $9.925+M/Valued at $4.764+M

Careerbuilder Cost $5.3+M/Valued at $1.854+M

American Nuts/ Cost = $4.295+M/Valued at $.901+M    

Of those three loans, the total cost is $19.52M with the claimed value as of 3/31/24 at $6.618M, creating at those numbers an unrealized loss of $12.902M. While that would not be important for a large BDC like Ares Capital, it is a significant unrealized for ICMB which had only 14.396+M weighted shares outstanding as a 3/31/24. P.2, 10-Q. The unrealized loss of $12.902M, using that share count, is $.896 per share.  

American Nuts | Sourcing, Packaging, and Merchandising All Nuts

Find a Job | CareerBuilder.com

Premiere Executive Search Firm - Klein Hersh

The fund does have claimed unrealized gains in several equity positions but also unrealized losses. 

Last Discussed: Item # 1.F. Added to ICMB  - Bought 5 at $3.45; 5 at $3.27 (10/28/23 Post) 

New Average cost per share:  

Dividend: Quarterly at $.12 per share ($.48 annually)

The next dividend will include a 3 cent "special" dividend.  

ICMB Stock Dividend History & Date

NII per share for 9 months: $.37 (barely covers regular dividend)

New Average Cost per share: $4.3 (210+ shares)

Yield at New AC =  11.16%  (regular dividend only)

Last Ex Dividend: 5/23/24 (owned all as of)

Last Earnings Report (Q/E 3/31/24): This report is for the third fiscal quarter.  

ICMB Announces Financial Results for the Quarter Ended March 31, 2024 

Net Investment Income per share: $.14

Net Asset value per share: $5.49 

Weighted average yield on debt investments at cost =  12.36%

99.6% of the debt portfolio is in rate loans 

Earnings call: Investcorp Credit Management BDC reports growth in Q3 FY2024 By Investing.com

"There was a net realized loss from investments of $6.3 million for the three months ended March 31, 2024 primarily due to the realization of losses associated with the sale and write off of our investments in 1888 Industrial Services, LLC." The 1888 Industrial has been a nonperforming loan for a long time and had been written down substantially in value prior to being sold.

Company evaluation of credit quality:

Pages 41-42, 10-Q

C. Started APA - Bought 5 at $30.7; 5 at $30.3; 5 at $29.8; 5 at $29.5: 

Quote: APA Corp.  (APA) 

Cost: $610.5

Prior to these purchases, I have not owned this stock. 

"APA Corporation owns consolidated subsidiaries that explore for and produce oil and natural gas in the United States, Egypt and the United Kingdom and that explore for oil and natural gas offshore Suriname and elsewhere."

APA is the holding company for Apache Corporation. 

Portfolio - APA Corporation

APA SEC Filings 

10-Q for the Q/E 3/31/24 

2023 SEC Filed Annual Report 

APA Analyst Estimates | MarketWatch (As of 5/21/25, the consensus E.P.S. for 2024 was $4.88; $4.97 in 2025 and $5.21 in 2026.

There was no reaction on 5/21/24 after APA announced that it had sold for $700M some non-core Texas assets. APA Announces over $700 Million in Asset Sales from Two Transactions for Non-core Texas Properties "Combined, the properties represent estimated net production in the first-quarter 2024 of 13,000 barrels of oil equivalent per day (Mboe/d), of which just over one-third is oil. Proceeds from these asset sales will be used primarily to reduce nearer-term borrowings. Closing for both sales is expected early in the third-quarter 2024."

Other Recent News: APA Corporation Completes Acquisition of Callon Petroleum Company "The acquisition will bring APA’s daily reported production to approximately 500,000 barrels of oil equivalent (BOE), approximately two-thirds coming from the Permian Basin. The acquired assets include approximately 120,000 net acres in the Delaware Basin and 25,000 net acres in the Midland Basin. Callon’s fourth-quarter production was 103,000 BOE per day, comprising 58% oil and 80% liquids." This was an all stock acquisition. 

Average cost per share: $30.08  (20 shares) 

Dividend: Quarterly at $.25 per share

Dividend History | APA Corporation

Yield at $30.5: 3.32%

Last Ex Dividend: 4/19/24

Last Earnings Report (Q/E 3/31/24): 

SEC Filing 

Net Income: $132M

GAAP E.P.S. = $.44

Non-GAAP Net Income: $237M or $.78

GAAP to Non-GAAP: 

"Reported production of 389,000 barrels of oil equivalent (BOE) per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 320,000 BOE per day"

"Completed acquisition of Callon Petroleum Company and increased expected annual cost synergies by 50% to $225 million; increases APA’s U.S. oil production by more than 80% from fourth-quarter 2023 to estimated fourth-quarter 2024."

"Discovered high-quality oil in two zones at King Street #1 well in joint-venture leasehold in Alaska."

Production Data: 

2. Corporate Bonds: 

A. Bought 2 Lennar 4.75% SU Maturing on 5/30/25 at a Total Cost of 99.191: 

Issuer: Lennar Corp. Cl A (LEN) 

LEN Analyst Estimates | MarketWatch

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa2/BBB

YTM at Total Cost: 5.558%

Current Yield at TC = 4.789%

B. Bought 2 Ares Capital 3.25% SU Maturing on 7/15/25 at a Total Cost of 96.909: 

Issuer: Ares Capital Corp.  (ARCC) - Externally Managed BDC

I own the common stock. 

Last ARCC Buy Discussion: Item # 4.C. Added 5 ARCC at $14.3; 5 at $14; 5 at $13.67; 5 at $12.5; 5 at $12.4; 5 at $12; 5 at $11.74; 5 at $10.44; 5 at $9.4 (4/4/20 Post)

Current ARCC Positions in Taxable Accounts (prices as of close on 5/23/24): 

Fidelity Account: Average cost at $11.04 (35 shares)

Schwab Account: Average cost at $12.52 (25+ shares)

Last ARCC Sell Discussion: Item # 2.B. Pared ARCC - Sold 2 at $20.36 (1/20/24 Post)(contains links to prior sell discussions, realized gain total then at $833.5) 

ARCC SEC Filings 

10-Q for the Q/E 3/31/24 (summary of investments starts at page 5)

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa3/BBB- 

YTM at Total Cost: 6.035%

Current Yield at TC = 3.354%

I have 4 Ares Capital 4.2% SU bonds maturing on 6/10/24. 

Last Bond Offering (May 2024): Prospectus $850M 5.95% SU maturing in 2029, with proceeds to be used to pay down credit facility borrowings. 

C. Bought 2 Santander Holdings USA 3.45% SU Maturing on 6/2/25 at a Total Cost of 97.755: 

Issuer: Subsidiary of Banco Santander S.A. ADR (SAN)

SEC Filings

SEC Filed Fixed Income Presentation for the Q/E 3/31/24 

SEC Filed 2023 Annual Report

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa2/BBB+

YTM at Total Cost: 5.692% 

Current Yield at TC = 3.53%

D. Bought 2 Essex Portfolio LP 3.5% SU Maturing on 4/1/25 at a Total Cost of 98.2: 

Issuer: Operating Entity for Essex Property Trust Inc. (ESS) who guarantees the notes - An Apartment REIT.

ESS SEC Filings 

SEC Filed Press Release for the Q/E 3/31/24 

ESS 10-Q for the Q/E 3/31/24 

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa1/BBB+

YTM at Total Cost: 5.638%

Current Yield at TC = 3.56%

I now own 6 bonds. 

Last Essex LP SU Issuance (3/24): Prospectus for 350M 5.5% SU maturing in 2034. Proceeds will be used in part to pay a 3.875% SU note that matured on 5/1/24. I owned 4 of those bonds (2 in a RI account):  

E. Bought 2 Blackstone Private Credit 2.7% SU Maturing on 1/15/25 at a Total Cost of 97.928: 

Issuer: Externally Managed BDC that is not publicly traded. 

SEC Filings SEC financial reports have to be filed by private companies who sell bonds to the public. 

10-Q for the Q/E 3/31/24 (investments at $52.412+B, debt at $23.832+B; investment income at $1.5688+B;   

FINRA Page: Bond Page | FINRA.org

Credit Ratings: Baa3/BBB-

YTM at Total Cost: 5.975%

Most of the total return will be taxed in 2025. 

Current Yield at TC: 2.757%

F. Bought 2 Synchrony Financial 4.5% SU Maturing on 7/23/25 at a Total Cost of 98.256: 

Issuer: Synchrony Financial  (SYF) 

SYF Analyst Estimates | MarketWatch

SYF SEC Filings 

10-Q for the Q/E 3/31/24 

SEC Filed Earnings Press Release for the Q/E 3/31/24

Finra Page: Bond Page | FINRA.org

Credit Rating: BBB-

YTM at Total Cost:  6.057%

Current Yield: 4.58%

G. Bought 2 American Tower 2.95% SU Maturing on 1/15/25 at a Total Cost of 98.339:

Issuer: American Tower REIT (AMT) - Owns Cell Towers

AMT SEC Filings 

SEC Filed Earnings Press Release for the Q/E 3/31/24 

10-Q for the Q/E 3/31/24 (long term debt listed at pages 13-14) 

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa3/BBB-  

YTM  at Total Cost: 5.581%

Most of the total return will be taxable in 2025 ($33.22 "profit" and 1 full semiannual interest payment of $29.5)

Current Yield at TC = 3%

I had 2 American Tower SU bonds mature on 5/15/24. 

Last Bond Offering (3/24): Prospectus 

Proceeds from these bonds will be used to repay indebtedness under a credit facility. 

3. Small Ball Sells: 

A. Pared MEGI - Sold 22+ at $13.41 - Fidelity Account: 

Quote: MainStay CBRE Global Infrastructure Megatrends Term Fund Overview

Proceeds: $297

Investment Category: Monthly Income Generation

MEGI SEC Filings

SEC Filing: Holdings as of 2/29/24 

Sponsor's website: MEGI MainStay CBRE Global Infrastructure Megatrends Fund

MEGI Portfolio | Morningstar (lists top 25 holdings)

I sold my highest cost 20 shares plus all shares purchased with the monthly dividend. 

Investment Category: Monthly Income Generation 

Last Buy Discussions: Item # 2.B. Added to MEGI - Bought 5 at $11.45 (4/19/24 Post); Item # 1.A. Added to MEGI - Bought 50 at $12.32 - Fidelity Account (4/12/24 Post)

Profit Snapshot: $10.38

Average cost per share before pare: $12.38 (107+ shares)

Average cost per share after pare: $12.24 (85 shares)

Snapshot Intraday on 5/15/24 after pare

Dividend: Monthly at $.125 per share ($1.5 annually)

Yield at new AC = 12.25%

Last Ex Dividend: 5/23/24 (owned 85 as of)

Data Date of 5/15/24 Trade:

Closing Net Asset Value per share: $15.48

Closing Market Price: $13.42

Discount: -13.31%

Sourced: MEGI-CEF Connect (Click "Pricing Information" tab)

B. Eliminated IIPR - Sold 2 at $114.42: 

Quote: Innovative Industrial Properties Inc. (IIPR)

Proceeds:$228.24

"Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated cannabis facilities."

Triple net lease REIT "where the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, real estate taxes and insurance."

The stock received a boost when Biden announced that cannabis would be reclassified to a less restrictive category in the Controlled Substances Act. President Biden announces moves to relax weed restrictions 

IIPR SEC Filings

10-Q for the Q/E 3/31/24 

Profit Snapshot: +$71.85

Last Discussed: Item # 2.J. Bought 2 IIPR at $78.5 (7/22/23 Post) 

Dividend: Quarterly at $1.82 per share ($7.28 annually), last raised from $1.8 effective for the 2023 4th quarter payment. 

Innovative Industrial Properties, Inc. (IIPR) Dividend History | Seeking Alpha

Last Ex Dividend: 3/27/24 (owned as of)

Last Earnings Report (Q/E 3/31/24): 

SEC Filed Press Release 

AFFO per share: $2.21, down from $2.25

Portfolio: 108 properties, 95.2% triple net lease occupancy  

Weighted average remaining lease term: 14.8 years

Net Income to AFFO Reconciliation: 

C. Pared MAA - Sold 2 at $137.1:  

Quote: Mid-America Apartment Communities Inc. (MAA)

Proceeds: $274.2

"As of March 31, 2024, MAA had ownership interest in 102,661 apartment units, including communities currently in development, across 16 states and the District of Columbia."

MAA SEC Filings

Profit Snapshot: +$9.07

Last Buy Discussions: Item # 1.E. Added to MAA - Bought 1 at $123.4; 1 at $122.25 (2/15/24 Post); Item # 1.A. Added to MAA - Bought 1 at $129.7; 1 at $128.55; 1 at $125.2 (2/9/24 Post)

Old AC per share: $127.75

New Average cost per share: $125.82

Dividend: $1.47 per share ($5.88 annually), last raised from $1.4 effective for the 2024 first quarter payment. The quarterly rate was at $.73 in 2014. 

Dividends MAA | Luxury Apartment Rentals

Yield at New AC = 4.67%

Last Ex Dividend: 4/15/24 (owned all as of)

Last Earnings Report (Q/E 3/31/24): 

SEC Filing 

Core FFO: $266.2M of $2.06 per share

Core Adjusted FFO: $247.2M, subtracts $19M in recurring capital expenditures

Funds Available for Distribution: $214M (subtracts $32.8M from core adjusted FFO for redevelopment, revenue enhancing, commercial and other capital expenditures. This is the only FAD calculation that I have seen that deducts these expenditures.

Net Income to FAD Reconciliation:

Average Rent per unit: $1,690 with physical occupancy at 95.3% 

D. Eliminated IP - Sold 26+ at $40.74 and 19+ at $42.98: 

Quote: International Paper Co.  (IP)

Proceeds: $1,908.77

IP Analyst Estimates | MarketWatch

IP SEC Filings

IP 2023 SEC Filed Annual Report

Profit Snapshot -Fidelity Account: Net of $58.31 (5/17/24 Sale only)

Profit Snapshot- Schwab Account: $92.14

I did not see the headline that Suzano was considering sweetening its $42 per share offer for IP prior to selling this 19+ shares. I am skeptical that Suzano will offer enough to seal a deal. 

These shares were sold on the ex dividend day (5/23)

Dividend: Quarterly at $.4625 per share ($1.85 annually)

IP Dividend History | Nasdaq

Analyst Reports (available to Schwab customers): 

Argus (5/2/24): Hold, but may change to buy when the price falls to technical support at $30 or volumes pick up substantially. 

Morningstar (4/25/24): 3 stars with a fair value of $40 and no moat. 

S&P (5/10/24): 3 stars with a 12 month PT of $34.   

In my last post, I discussed selling  2+ IP shares in this account Item # 3.B. Sold 2+ IP at $39.22 (5/17/24 Post)(profit snapshot = $8.57). I discussed the last earnings report in that post and have nothing further to add here. SEC Filed Press Release 

E. Eliminated PFE in Schwab Account - Sold 9 at $29.28: 

Quote: Pfizer Inc. (PFE)

Proceeds: $263.51

IMO, Pfizer is a deservedly hated drug company. I view it as temporary bond substitute that I will try to flip at a profit after harvesting more than 1 dividend. 

The cost of acquisitions starting in 1999 far exceed the current market capitalization. 

Annual Average Total Return 1/1/1999 through 5/22/24 (dividends reinvested) = +2.2%

DRIP Returns Calculator | Dividend Channel

Some Acquisitions: 

Warner Lambert: $90.2B

Wyeth: $68B

Pharmacia: $60B

Hospira: $17B

Medivation: $14.3B

Biohaven: 11.6B

Array: $11.4B

Arena: $6.7B

Global Blood Therapeutics: $5.4B

Anacor: $5.2B 

King Pharmaceuticals: $3.6B

Trillium: $2.26B

Seagen: $43B

Total: $338.66B

Pfizer's $43B buyout of ADC specialist Seagen is a done deal

Market Capitalization at $29.6 = $161.8B or less than 1/2 of the total acquisition costs listed above. 

The stock price is lower now than it was before the $50B or so in Covid vaccine revenue received in 2020.

PFE | Pfizer Inc. Analyst Estimates | MarketWatch

PFE SEC Filings

Profit Snapshot: +$17.81

Last Elimination: Item # 1.E. Eliminated PFE in 2 Accounts: Sold 7 at $41.26 and 3+ at $41.29  (3/6/23 Post)(profit snapshots = $48.92) Snapshots of prior realized gains over $100, staring in 2006, can be found in that post.  

Dividend: Quarterly at $.42, last raised from $.41 effective for the 2024 first quarter payment.

Pfizer Inc. (PFE) Dividend History | Seeking Alpha

The quarterly rate was slashed from $.32 to $.16 per share in 2009. 

I would rate the dividend history as poor starting with that cut. The increase from $.32 to $.42 is only 31.25% over a 15 year period.   

Last Ex Dividend: 5/9/24 (owned all as of)

Last Earnings Report (Q/E 3/31/24) SEC Filed Earnings Press Release 

GAAP E.P.S. = $.52

Non-GAAP E.P.S. = $.82

Both include an $.11 from at $771M favorable final revenue adjustment  for actual Paxlovid treatments returned by the government. In other words, less than previous revenue reversal of $3.5B taken in the 2023 4th quarter. I would ignore that accounting add back to the 2024 E.P.S. GAAP and Non-GAAP numbers and simply say that the 4th quarter was $.11 better than previously reported.  

GAAP to Non-GAAP

I grew weary of the adjustment to GAAP about a decade ago. 

2024 Guidance: Adjusted E.P.S. of $2.05 to $2.25

Analyst Reports (available to Schwab customers): 

Morningstar (5/1/24): 5 stars with a fair value of $42 and a wide moat. 

Argus (5/9/24): Hold. Analyst notes that patent expirations starting in 2025 through 2030 will result in about $17B in lower revenues from peak levels of those drugs. 

S&P (5/3/24): 3 stars with a 12 month PT of $28. Analyst notes that the 2024 guidance in revenues from compounds acquired through the Seagen acquisition was slightly lower than expected at $3.1B. 

Some Prior Sell Discussions: Item # 3.J. Sold PFE Shares Bought with Dividends at $51.714 and at $60.93(12/16/21 Post); Item # 2.M. Sold 6 at $36.69 (11/28/20 Post)(profit snapshot = $43.6); Item # 4.A. Sold Remaining 33 PFE shares  at $33.44 (8/13/2017 Post)(profit snapshot = $90.67); Item # 3.A. Sold 100 PFE at $34.03 (7/13/17 Post)(profit snapshot = $143.42); Item # 3.A. Sold 100 PFE at $34.65 (3/13/17 Post)(profit snapshot = $235.86); Item # 1 Sold: 100 PFE at $31.68 (5/17/14 Post)(profit snapshot = $282.12) Buy discussions are linked in those posts.

PFE Realized Gains to Date: $1,316.21

4. Treasury Bills Purchased at Auction: 

A. Bought 5 T Bills at the 5/20/24 Auction: 

182 Day Bills

Matures on 11/21/24

Interest: $130.43

Investment Rate: 5.372%

B. Bought 5 T Bills at the 5/20/24 Auction: 

91 Day Bills

Matures on 8/22/24

Interest: $66.29

Investment Rate: 5.389%

5. U.S. REIT Preferred Stocks: 

A. Started ADCPRA - Bought 10 at $17.1: 

Quote: ADC-PA 

Cost: $170.96

Given the low coupon, I doubt that this preferred stock will ever be called. My next purchase will need to be below $16.  

Issuer: Agree Realty Corp. (ADC) 

ADC SEC Filings 

SEC Filed Earnings Press Release for the Q/E 3/31/24 

Investment Category: 

Prospectus 

Par Value: $25

Coupon: 4.25%

Yield at $17.1: 6.21%

Dividends: Paid quarterly and cumulative

Last Ex Dividend: 5/23/24 (owned as of)

Maturity: None, potentially perpetual 

Issue Optional Redemption: At par value + accrued and unpaid dividend on or after 9/17/26

Stopper Clause: See page S-12 of the Prospectus (prevents ADC from paying a cash common stock dividend and deferring the preferred stock dividend) 

Last SU Bond Offering (5/24, operating entity): Prospectus for $450M of 5.625% SU maturing in 2034. 

6. CDs - FDIC Insured: 

A. Bought 1 Wells Fargo 5.3% CD Maturing on 5/29/25: 

Interest paid at maturity. 

7. Exchange Traded Bonds: 

EAI is an exchange traded first mortgage bond issued by Entergy Arkansas, one of the operating utilities of the holding company Entergy. Exchange traded simply means that EAI trades just like a common stock. 

Interest rate risk is asymmetric in favor of the issuer, which I have pointed out here many times.  

If longer term interest rates rise, the issuer will allow me to keep the bond that is going down in price, presenting me with two unfavorable options. 

The first is that I could sell the bond at a loss and reinvest the proceeds into a bond with a higher current yield and YTM. 

The second is that I keep the bond going down in price and lose the opportunity to use the proceeds to buy the higher yielding bond. Since my bond ladder is heavily concentrated in short term maturities where the proceeds can be reinvested into higher yielding securities in this scenario, I am okay with this risk.  

And, if interest rates plunge again, the issuer may exercise its optional redemption right to call the bond at par value. There is no make whole penalty for an early redemption, which is generally the case for exchange traded bonds. I own Entergy Arkansas FM bonds that have a $1,000 par  that trade in the bond market which have make whole provisions. 

I do not care that EAI can be called early at par value since I am buying at a discount to par value and that discount would not exist if this FM bond had a make whole penalty attached to an early redemption. The price would likely be near par value. 

A. Added to EAI in Vanguard Taxable Account - Bought 5 at $21.7; 10 at 21.5; 10 at $21.27: 

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

Cost: $536.2

Issuer: Wholly owned subsidiary of Entergy Corp. (ETR)

ETR 10-Q for the Q/E 3/31/24 The Entergy Arkansas financial information starts at page 73.  

Investment Category: Exchange Traded Baby Bonds

I own this FM bond in 3 taxable accounts and two Roth IRA accounts. 

My maximum taxable account exposure is 300 shares, buying up to 100 shares in each of those 3 taxable accounts. I am currently at 260 with the Vanguard account position being the only one that is short of 100 shares. The only reason that account is slower to reach 100 is that the funding for purchases in that account is sourced from my highest yielding treasury money market fund.  

Last Discussed: Item # 6.A. Added to EAI in Vanguard Taxable Account - Bought 10 at $21.64 and Item # 6.B. Added 20 EAI in My Fidelity at $21.62 and Added 30 at $21.5 in my Schwab Account (12/30/23 Post); Item # 6.B. Added 5 EAI at $21.6 - Vanguard Taxable Account (12/16/23 Post); Item # 5. Added to EAI in Schwab Account - Bought 5 at $21.5; 5 at $21.22 (11/25/23 Post); Item # 5.B. Added 5 EAI at $20.1; 5 at $19.85 - Schwab Account (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)

Prospectus

First mortgage lien on substantially all assets 

Par Value: $25

Coupon: 4.875%

Maturity: 9/1/66

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

Trades Flat (whoever owns the security on the ex interest date receives the entire quarterly interest payment)

Interest Payments: Quarterly

Next Ex Interest: 5/31/24

Average cost per share this account: $22.15 (60 shares)

Yield at New AC = 5.5%

I own 3 Entergy Arkansas 3.7% first mortgage bonds ($1,000 par value) maturing on 6/1/24. 

8. Treasury Note Purchased at Auction: I do not pay a brokerage commission for treasury trades, either at auction or in the secondary market, in my Fidelity, Schwab and Vanguard accounts. I am not able to hit August or October 2025 maturities now with auction purchases.  

A. Bought 1 Treasury Note 5% Coupon Maturing on 10/31/25 at a Total Cost of 99.979: 

YTM = 5.013%

B. Bought 1 Treasury Note 4.5% Coupon Maturing on 10/15/25 at a Total Cost of 98.949: 

YTM at TC = 5.036%

I now own 2. 

C. Bought 1 Treasury Note 5% Coupon Maturing on 8/31/25 at a Total Cost of 99.811: 

YTM at TC = 5.08%

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.