BOTZ, CVI, DNB, EMA:CA, MDLZ, NSAPRA, OCSL

Economy: 

What is CrowdStrike (CRWD), and how did it cause global IT outages?; CrowdStrike Holdings Inc. Cl A (CRWD) 

Trump Warned Powell Not to Lower Rates Before the Election. Markets Still Expect a September Cut. - Barron's Trump does not want anything to happen before the election that will reduce his odds of winning.  

Powell indicates Fed won't wait until inflation is down to 2% before cutting rates

Fed Governor Waller sees central bank 'getting closer' to an interest rate cut

Economists say Trump would reheat inflation more than Biden: WSJ Survey-CNBC 

Supreme Court in Chevron ruling sets up legal chaos

The 2017 Trump Tax Law Was Skewed to the Rich, Expensive, and Failed to Deliver on Its Promises | Center on Budget and Policy Priorities

What a Trump presidency could mean for Europe’s economy

China reports second-quarter GDP growth of 4.7%, missing expectations  

‘Drill Baby Drill’ Never Died: The U.S. Just Expanded Its Energy Dominance - Barron's

Weekly U.S. Field Production of Crude Oil (Thousand Barrels per Day) 

Beige Book for July "Economic activity maintained a slight to modest pace of growth in a majority of Districts this reporting cycle. However, while seven Districts reported some level of increase in activity, five noted flat or declining activity—three more than in the prior reporting period. Wages continued to grow at a modest to moderate pace in most Districts, while prices were generally reported to have risen modestly."

Taiwan and Trump. A Recipe for Global Depression? - Barron's

The Trump vs. Biden economy in 17 charts - The Washington Post

 +++

Allocation Shifts Discussed in this Post: 

Treasury Bills Purchased at Auction: $19,000 in principal amount

Corporate Bonds: $4,000 in principal amount

U.S. Individual Common Stocks: +$639.65

Canadian Common Stock: +C$4,661 (converted to US$3,403 for allocation purposes)

Stock Funds (ETF BOTZ): +$156.63

Inflow Common Stocks/Stock Funds: +$4,199.28  

REIT Equity Preferred Stock: +$111.75

2024 Outflow Common Stocks/Stock Funds: -$18,078.48

Treasury Yield Curve - July 2024: 

Resource Center | U.S. Department of the Treasury

CME FedWatch - CME Group: September FF Range Probabilities 

Real Yields TIPs: 

10 Year TIP Breakeven Inflation Rate as of 7/18/24: 2.31%

+++

Biden: 

Biden's mental and physical symptoms are consistent with Parkinson's disease, as noted by a number of neurologists.  

Neurologist comments on Biden's health - YouTube

Biden's Cognitive Health: Neurologist Explains - YouTube

I do not expect Biden to win. So 4 more years of Trump. 

Unlike Trump supporters, Democrat voters live in an objective reality and cannot unsee and unhear Biden's debate performance.  My Video: Trump and Biden Mental Fitness - YouTube 

Republicans have had more than 8 years to see Trump for who and what he is, which is obvious to anyone living in an objective reality, but they hear and see none of it.  

Pelosi privately told Biden polls show he cannot win and will take down the House; Biden responded with defensiveness | CNN 

Chuck Schumer privately urged Biden to step aside in presidential race, sources say - YouTube

Biden is becoming very angry with moderate Democrats who point out the obvious to him.  Biden raised his voice over House Dem commander-in-chief concerns: ‘I don't want to hear that crap’ - POLITICO

Biden claims only the "elites" wants him to quit the race. A recent AP-NORC poll found that 65% of Democrats want him to quit the race.

If Biden somehow manages to squeak out a victory in the 3 major battleground states (Wisconsin, Pennsylvania, and Michigan), I would expect the margin of victory to be even smaller than in 2020, and that will most likely lead to more extreme Trumpster violence and more chaos than what occurred after the last election.   

If the Democrats do not regain control over the House, which is at least possible, and/or keep control in the Senate, which is far less likely, then the only restraint on Trump in his second term will be Trump controlling his worst impulses by refusing to act upon them. There is no evidence that would suggest that he is even capable of doing so. He has become even more unhinged over the past 4 years IMO. 

The Democrats need to refocus their money on the House races that are close. 

+++

Trump and His Party: 

There is no distinction between Trump and the Republican Party. They are one and the same, indistinguishable from one another and need to be treated as such in 2024 and for decades hereafter. That is what the republicans want and that needs to stick.   

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

The Trump appointed federal district court judge Aileen Cannon dismissed all of the charges against Trump and the other 2 defendants arguing that Jack Smith's appointment violated both the Appointments and Funding Clauses contained in the U.S. Constitution.  It is impossible for me to treat Cannon as an impartial jurist. I discussed that decision in a YT video and have nothing further to add here. Judge Cannon, appointed by Trump, Dismisses all criminal charges against him - YouTube

The federal courts, dominated by Republicans including the 6 Republican Supreme Court Justices, will not hold Trump accountable for what he has done or will do during his second term. 

++

Secret Service spotted Trump rally shooter on roof 20 minutes before gunfire erupted - YouTube

Trump was lucky to survive the assassination attempt. He moved his head slightly just before the bullet arrived, see Assassination Attempt on Donald Trump -- Geolocation of Trump, Shooter and Secret Service Sniper - YouTube Trump is claiming that God saved him. Trump says ‘God alone’ prevented his assassination - YouTube

The shooter, Thomas Matthew Crooks who was 20, fired several rounds from an assault weapon as he was perched on a roof of an unsecured building about 430 feet from the stage with a clear line of sight. CNN analysis shows gunman was a few hundred feet away from rally stage; Tracking the Trump rally gunman’s movements leading up to his attack | CNN Crooks had a wireless transmitter on him that was linked to an explosive device in his car located under the trunk.  

Crooks borrowed the assault rifle from this father who has 20 firearms registered in his name. There are reports that Trump signs were displayed at the home before the shooting. Thomas Matthew Crooks Had Donald Trump Signs in His Yard—Neighbor - Newsweek

This was an obvious Secret Service failure, described as "stunning failure" by the WSJ. This is not a conclusion that is subject to debate. And, it has been recently disclosed that the Secret Service had ramped up protection for Trump prior to the shooting based on intelligence that Iran wanted to assassinate him which has no connection to what happened. Secret Service ramped up security after receiving intel of Iranian plot to assassinate Trump; no known connection to shooting | CNN Politics

A secret service sniper, located on top of a building behind Trump, was able to take the shooter down quickly. What if the shooter has been armed with an assault rifle modified by a bump stock? Even with a quick reaction from the Secret Service sniper, the dead and injured could have surpassed 20. 

Before knowing anything about the shooter, many republicans were blaming Joe Biden or the news media. 

Based on what is known now, the shooter was a mentally disturbed loner, and his motive had nothing to do with political ideology or party affiliation. He had registered as a republican and a member of a gun club. (e.g. Trump shooter Thomas Matthew Crooks was loner ‘relentlessly’ bullied in high school: - YouTube)  

‘You’re next’: Some Trump supporters blame the media for assassination attempt | CNN Business

The Gunman and the Would-Be Dictator - The Atlantic

Phone search shows Trump shooter had photos of Trump, Biden, Garland - The Washington Post

The photo taken by an AP reporter that shows Trump with blood on his face, raising his fist to the sky, with the American flag waving in the background, will be one of those iconic photographs that people remember for a long time and has the power to influence opinions. Trump taps "fake elector" to present him with official nomination In my lifetime, I have seen only a few photographs that have that power. 

I was impressed on how Trump handled himself after the attempted assassination. 

I would note that the crowd behind Trump had the worst possible reaction. Almost no one went to ground and many took out their cell phones to film what was happening. 

++

Trump claims not to know who is behind Project 2025. A CNN review found at least 140 people who worked for him are involved | CNN Politics

We Still Don't Know What to Do With the Endless Stream of Trump Lies - The Atlantic 

How Donald Trump Will Mold America “in the Image of a Dictatorship” | Vanity Fair

++

Elon Musk to donate $45 million a month to Trump Super PAC 

Musk Donates to Trump, Tapping Fortune to Swing 2024 Race - YouTube; 

Elon Musk is going all-in on Donald Trump;  Elon Musk Enters Uncharted Territory With Trump Endorsement - The New York Times 

For those opposed to Trump becoming President again, why are you still on "X" or why would you consider buying a Tesla, or buy products from any corporation that donates a significant amount to help Trump become President again, either campaign donations to his reelection campaign or to a a PAC supporting him?   

++

Giuliani has ruined his reputation working for Trump and has not even been paid. Rudy Giuliani Whines That Trump Still Owes Him Boatload of Money | The New Republic  No sensible lawyer, knowing Trump's history in failing to pay what he owes, would even start to work for Trump without most of the likely legal fees paid into the lawyer's escrow account. USA TODAY exclusive: Hundreds allege Donald Trump doesn’t pay his bills

Giuliani had his bankruptcy case dismissed by a federal bankruptcy judge last week which will allow creditors to immediately seize his assets unless the order is stayed for an appeal. Rule 8007. Stay Pending Appeal; Bonds; Suspension of Proceedings; 28 U.S. Code § 158 - Appeals Giuliani can refile his petition after 12 months. The Judge found that Giuliani was not transparent in disclosing his assets. Judge Sean H. Lane dismisses Giuliani’s bankruptcy case, allowing creditors to try to seize his assets; Judge dismisses Rudy Giuliani's bankruptcy case - YouTube

Giuliani has ‘no regrets’ about defaming 2020 election workers 

Rudy Giuliani Trips and Falls at Republican Convention - Newsweek

++

J.D. Vance made several unfavorable comments about Trump before his thirst for power caused a change of heart. Trump-Endorsed Candidate JD Vance Once Said Trump Might Be ‘America’s Hitler’; KFILE: Ohio Sen. JD Vance once called Trump a ‘moral disaster,’ and possibly ‘America’s Hitler’ Those comments will be in Democrat campaign commercials but will not sway any voters. Vance was spot on about Trump before ambition changed his opinions.   

In Vance, Trump finds a kindred spirit on election denial and Jan. 6 - The Washington Post Vance says that he would have thrown out the election results in 4 states won by Biden. Vance's clear anti-democracy rhetoric endeared him to the autocratic Trump who was recently given kingly powers by the 6 Republican Supreme Court Justices.  

+++

For several decades now, Trump has been one of the primary creators of fact free conspiracy theories. Trump endorses vaccine conspiracy in leaked call with RFK Jr. after assassination attempt; Trump echoes Kennedy's vaccine conspiracies in leaked phone call It is not surprising that Trump and RFK Jr. are having conversations. RFK Jr. confirms video of Trump call is legitimate, apologizes - CBS News 

++

Trump says Taiwan should pay the U.S. for defense 

My Video: Trump on U.S. Defending Taiwan - YouTube

Trump Signals Weakness to Xi Jinping - The Atlantic

Taiwan and Trump. A Recipe for Global Depression? - Barron's The author notes that about 90% of the advanced chips are made by Taiwan Semiconductor Manufacturing (TSMC) in Taiwan. 

Trump's Taiwan policy was summarized in a recent Bloomberg interview.  

Trump: Taiwan "did take about 100% of our chip business. Taiwan should pay us for defense. You know we're no different from an insurance company. I wouldn’t feel so secure right now if I were them". 

These kind of statements lowers the deterrence value of an ambiguous U.S. policy that leaves open the possibility that the U.S. may intervene to protect Taiwan and consequently makes it more likely that China will invade or blockade Taiwan. 

Previously, Trump told a U.S. senator that there was "fu-----" nothing the U.S. could do about China invading Taiwan. 

Trump has basically given an invitation to China to take Taiwan by force unless Taiwan pays the U.S. for defending it. So, if Taiwan pays enough money, though the amount is unknown, the U.S. guarantees to do something to defend Taiwan against a Chinese invasion? Has Trump thought this through, considering all of the ramifications? Trump does not do thinking through. 

If there was a military conflict between China and Taiwan that destroys chip factories, or China simply blockades the Island, the risk is a quick entry into a global depression. The global economy would come to a halt even after a few weeks. The TSMC chips are used in cellphones, computers, household appliances, automobiles, defense systems, and data service centers. 

++

My Video: Brief history of results oriented Supreme Court Decisions - YouTube

+++

Psychopath Putin and His Orcs: 

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

Ukrainian Drones Destroy Electronics Factory in Kursk Region - YouTube

The Trump-J.D. Vance combination is a pro-Putin, anti-Ukrainian aid combo.  Trump’s choice of Vance ‘terrible news’ for Ukraine, Europe experts warn -The Guardian; JD Vance's VP nomination will cause chills in Ukraine 

(My YT Videos: GOP's Return to Isolationism with a Pro Putin Result - YouTube) Putin-Trump "Peace" Plan for Ukraine - YouTube; Trump and Putin Part 3 - YouTube; Putin and Trump Part 2 - YouTube; Putin and Trump - YouTube; Analytical and Fact Based Thinking: Putin and Trump - YouTube)

Many Wrecked Russian Vehicles Near Vodyane, Donetsk Filmed by Russian Soldier - YouTube

HIMARS Destroys Russian MLRS Or SAM System Under a Bridge in Donetsk -- BIG Ammo Cookoff - YouTube

S-300 Battery Destroyed by ATACMS - YouTube

Russian Self-Propelled Howitzer Factory Uraltransmash on Fire in Yekaterinburg - YouTube

A Putin "court" sentenced a WSJ journal reporter Evan Gershkovich to 16 years in prison for fabricated charges of espionage. U.S. citizens who are not connected to the U.S. embassy, particularly journalists, need to leave Russia or face long term prison sentences on fabricated charges. There is very little that can be done when Russia seizes a U.S. citizen as a hostage which is what Putin has done with Evan.   

+++

1. Bought Back 100 EMA:CA at C$46.61 (C$1 Interactive Brokers Commission): 

Quote: Emera Incorporated (EMA.TO) - Utility Holding Company

Total Cost: C$4,662

I have a CAD currency position in this account which does pay interest. The current balance is close to C$30K. I will earn more in dividends paid by EMA than from idle cash.  

Website: Home| Emera

Emera owns utility companies operating primarily in the U.S. and Canada. 

U.S.:  Tampa Electric; Peoples Gas; New Mexico Gas Co. 

Canada:  Emera Newfoundland & Labrador;  Nova Scotia Power 

Emera New Brunswick owns a natural gas pipeline

Emera Caribbean is the parent company of utilities that generate and deliver electricity in the Bahamas, Barbados, and St. Lucia. 

Other Subsidiaries: Emera Energy; Emera Technologies 

Last Round-Trip: Item # 2. Sold 100 EMR:CA at C$62.77 (4/21/22 Post)(profit snapshot = +C457); Item # 1. Bought 100 EMA:CA at C$58.18 (11/5/21 Post) I decided to buy back the shares in response to possible FED rate cuts and the dividend yield at my purchase price. The purchase price at C$46.61 is more attractive as well compared to my last purchase noted above. 

Recent Material News: 

Emera Announces Strategic Reallocation of Capital to Drive Long-Term Growth; Updates Growth Guidance (6/28/24) Emera guided E.P.S. growth of 5-7% through 2027 and rate based growth of 7%-8% through 2029. 75% of the rate base growth is expected from new capital investments in Tampa Electric and Peoples Gas, both operating in Florida. Once capital investments are made, the utility operating companies will request the regulatory commissions to include those costs in the rate base and to grant a rate of return on those assets. The company expects to invest C$8.8B in the 2024-2026 period under its current capital investment plan. The dividend increases will be restrained to 1% or 2% per year given the capital investments through 2027.   

Emera Completes Transaction to Transfer Equity Interest in Labrador Island Link (6/4/24): Emera sold its indirect minority equity interest in the Labrador Island Link that owns a 1,100 km high voltage transmission line that carries renewable energy to Nova Scotia. The transaction was valued at C$1.19B, consisting of C$957M in cash and C$235M for the buyer to assume Emera's obligation to fund the remaining investment.  Labrador Island Link Welcomes New Investor (5/28/24). Proceeds will be used to partially fund the capital investments discussed above. 

Dividend: Quarterly at C$.7175 per share (C$2.87 annually), last raised from C$.69 effective for the 2023 4th quarter payment. 

Dividend Payment History | Emera

Yield at C$46.62 Total Cost: 6.156%

Next Ex Dividend: 8/1/24

Last Earnings Report (Q/E 3/31/24): 

Emera-Q1-2024-Financial-Statements.pdf 

Emera-Q1-2024-Management Discussion .pdf

Emera Reports 2024 First Quarter Financial Results | Emera

All amounts are in Canadian Dollars. 

Comparisons are to the 2023 first quarter. 

Operating Revenues:$2.018B, down from $2.433B

Net income: $207M, down from $560M

E.P.S. $.73, down from $2.07

Adjusted Net Income = $471M, down from $576M

Adjusted E.P.S. $.76, down from $.99 

Reconciliation: The snapshot includes an explanation of the "MTM" adjustments.  

MTM Mark-to-Market The lower revenue and earnings compared to the 2023 first quarter was explained as follows; 

One factor was milder weather in the Tampa Electric service territory. Weather can significantly impact quarterly results for utilities and Y-O-Y comparisons. The adjusted net income from Tampa Electric declined to $85M from $107M. 

The 2023 first quarter included a $268M MTM gain. 

Other Owned Emera Securities: 

2 Emera Finance 3.55% SU Bonds maturing on 6/15/26, Bond Page | FINRA.org, guaranteed by Emera, that I discussed buying in my last post. Item # 3.A. Bought 2 Emera Finance SU bonds at a Total cost of 96.129 (7/12/24 Post)

200 shares of the Emera Reset equity preferred stock, EMA-PC.TO, that reset its coupon for 5 years last August at 6.434% paid on a C$25 par value. Item # 2.A. Added 100 EMA.PRC:CA at C$19.7 (12/23/23 Post); Item # 1. Bought Back 100 EMA.PRC:CA at C$18.45 (10/18/22 Post) 

Price as of close on 7/18/24/Unrealized Gain = C$611

The next ex dividend is on 8/1/24, the same day as the common stock. Emera Declares Quarterly Dividends (quarterly at C$.40213)

Realized EMAPRC:CA Gains to Dates:  +C$1,169

2. Small Ball Buys: 

A. Added 5 CVI at $24.42: 

Quote: CVR Energy Inc. (CVI)

Cost: $122.09 

CVI Analyst Estimates | MarketWatch

CVI SEC Filings

Investor Relations | CVR Energy, Inc.

Last Discussed: Item # 1.C. Added to CVI - Bought 5 at $27.7; 5 at $27.1; 5 at $26.7  (6/7/24 Post) 

The stock has continued to slide since my last discussion as I slowly work my way up to a 100 share position. 

There are two reasons for the price weakness IMO. 

(1) The company has reportedly submitted a bid to acquire the shares of the parent company Citgo Petroleum which is indirectly owned by Venezuela, to satisfy over $21B in judgments against that nation for defaults and expropriations. Citgo is the 7th largest refining company in the U.S. Exclusive: Icahn-owned oil refiner CVR bidding in Citgo share auction, sources say | Reuters; US court gets 12 preliminary bids in Citgo share auction - Oil & Gas 360

It is noted in that Reuters article that the 3 refineries owned by Citgo would be a good strategic fit for the two owned by CVR.  Citgo also owns terminals that store refined products. 

While the acquisition of those assets through acquiring the shares of the parent company makes strategic sense, CVR would have to load up on debt to finance the acquisition and would likely eliminate its dividend IMO. The market capitalization of CVR at the current price is hovering around $2.5B so the company is relatively small for such a large acquisition. 

(2) Refining profits have recently been weak. (e.g.  ExxonMobil Announces First-Quarter 2024 Results, noting a $2.8B decrease in net income from energy products due in part to "weaker industry refining margins") Refining margins will experience wide fluctuations and that is to be expected. 

New Average cost per share: $27.13 (35 shares) 

Dividend: Quarterly at $.50 per share. 

Cash Dividends | CVR Energy, Inc.

Yield at New AC = 7.37%

Last Ex Dividend: 5/10/24

Last Earnings Report (Q/E 3/31/24): SEC Filed Press Release discussed at Item # 1.A. (5/17/24 Post)

B.  Restarted MDLZ - Bought 3 at $65.57; 2 at $64.83: 

The preceding snapshot also includes my last elimination where I sold 3 shares at $66.32 (3/23)

Quote: Mondelez International Inc. Cl A (U.S.: Nasdaq) | MarketWatch

Cost: $326.37

MDLZ Analyst Estimates | MarketWatch

One concern about MDLZ is that consumers taking a weight loss drug may be less interested in buying its snacks. That is a common concern among packaged food/snack companies. 

Our Brands | Mondelēz International, Inc. Products are marketed in more than 150 countries. 

This company was spun out of Kraft back in 2012. Spin-Off Information | Mondelēz International, Inc. I did own Kraft when it owned the businesses included in the Mondelez spin-off but sold those shares in 2010: 

Total Profit 300 Shares: +$701.57

Kraft later merged with H.J. Heinz which has not been successful. The Kraft Heinz Company Announces Successful Completion of the Merger between Kraft Foods Group and H.J. Heinz Holding Corporation (7/2/2015)

Average cost per share: $65.27 (5 shares)

MDLZ Dividend: Quarterly at $.425 per share ($1.7 annually), last raised from $.385 effective for the 2023 third quarter payment. 

The starting dividend yield is too low for me. Consequently, I only bought 5 shares and will average down only in 1 to 3 share lots.  

Dividend Info | Mondelēz International, Inc.

Dividend History: Good for a packaged food company. In the 2014 second quarter, the quarterly dividend was at $.14 per share. 

Yield at $65.27: 2.6%

Last Ex Dividend: 6/28/24

Last Earnings Report (Q/E 3/31/24): 

SEC Filed Press Release 

Revenues: $9.29B, up 1.4% 

GAAP Diluted E.P.S. = $1.04

Adjusted E.P.S. = $.95, up 16.3% on a constant currency basis

Consensus at $.89 per Schwab

Reconciliation GAAP to Non-GAAP: 

Free cash flow: $1.025B 

Analyst Reports (available to Schwab customers): 

Morningstar (5/10/24): 4 stars with a fair value of $75 and a wide moat. 

Argus (3/22/24): Buy with a 12 month PT of $83. 

S&P (5/1/24): 3 stars with a 12 month PT of $72

C. Added 3 OCSL at $18.59; 2 at $17.93: 

Quote: Oaktree Specialty Lending Corp. (OCSL) - An externally managed BDC

Cost: $91.62

Annual Report for the F/Y Ending 9/30/23 (Risk factor summary starts at page 22 and ends at page 48)

OCSL SEC Filings 

Recent News on Management Fees: Oaktree Specialty Lending Corporation Announces Permanent Base Management Fee Reduction (reduced to 1% of gross assets from 1.5%) 

Last Discussed: Item # 3.H. Added to OCSL - Bought 2 at $18.08 (5/13/23 Post); Item # 1.C. Added 5 OCSL at $18.53(4/1/23 Post)

New Average Cost per share: $19.14 (27 shares)

Dividend: Quarterly at $.55 ($2.2 annually)

OCSL Dividend History | Seeking Alpha

Yield at New AC = 11.49%

Last Ex Dividend: 6/14/24 (owned 22 as of)

Net Asset Value per share History: 

3/31/24:    $18.94

12/31/23:  $19.14

9/30/23:   $19.63

9/30/22:   $20.38

9/30/21:    $21.84

9/30/20:   $19.47

9/30/19:    $19.81

9/30/18:    $18.26

The external advisor replaced another firm as of 10/17/2017 that had failed miserably.  Form 8-K

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

SEC Filed Earnings Press Release and SEC Filed Slide Presentation 

Adjusted Net Investment Income per share:  $.56, down from $.62

Adjusted NII adds back an amortization noncash expense related to an acquisition. 

Weighted average interest yield on debt investments: 12.2%

Weighted average Interest rate on borrowings: 7%, up from 6.2% in the 2023 first quarter. 

85% of loans are at floating rates.

Other Financial Metrics: 

The nonaccrual investments as a percentage of debt investments at cost is too high at 4.3%. I am likely to be extremely timid in adding to this significant position.  

Debt: 

I own 4 of the SU note that matures on 2/25/25. I will not buy more until I receive the proceeds from those bonds. 

10-Q for the Q/E 3/31/24 List of investments starts at page 6. Loans with a (20) in the far right column are in nonaccrual. 

I took snapshots of 2 of them: 

The numbers on the far right are the estimated fair values with the cost numbers to the left.

Impel Pharmaceutical filed for bankruptcy in December 2023 and apparently has sold its assets.  

Thrasio has also filed a BK petition. Thrasio, once king of e-commerce aggregation, files for Chapter 11 | TechCrunch

I discussed in a 7/13/24 comment an emerging headwind for BDCs. Their floating rate loans are priced at spreads to short term interest rates, like the 3 month SOFR, and net investment income will decline as the FED cuts the federal funds rate. The BDCs have had to refinance maturing senior unsecured debt at higher coupons than the maturing ones. Taken together, assuming both occur, those events would pressure net investment income down.  

D. Started DNB - Bought 10 at $9.96: 

Quote: Dun & Bradstreet Holdings Inc. (DNB) 

Cost: 99.57 

"Dun & Bradstreet, a leading global provider of business decisioning data and analytics, enables companies around the world to improve their business performance. Dun & Bradstreet’s Data Cloud fuels solutions and delivers insights that empower customers to accelerate revenue, lower cost, mitigate risk, and transform their businesses."

DNB Analyst Estimates | MarketWatch As of 7/156/24, the average 2024 E.P.S. estimate was at $1.03. 

Investment Category: Lottery Ticket Basket due to heavy debt load.

DNB SEC Filings 

Last Discussed: Item # 2.C. Eliminated DNB - Sold 5 at $20.19 in Vanguard Taxable Account (2/10/22 Post)(profit snapshot = $16.65)-Item # 1.M. Bought 5 DNB at $16.96 (10/1/21 Post)

5 Year Chart through 7/15/24: Long term bear market trend with stabilization near current price starting in September 2023. 

Dividend: Quarterly at $.05 per share

DNB Dividend History | Nasdaq

I view this dividend as more likely to be eliminated than to be increased. 

Yield at $9.96: 2%

Last Ex Dividend: 6/6/24

Last Earnings Report (Q/E 3/31/24): 

SEC Filed Press Release 

Revenue: "$564.5 million, an increase of 4.5% and 4.1% on a constant currency basis compared to the first quarter of 2023. Organic revenue increased 4.3% on a constant currency basis compared to the first quarter of 2023."

GAAP Net Loss: $23.2M or 5 cents per share

Adjusted E.P.S. +$.20

GAAP to Non-GAAP: 

The largest add back is $110.8M in amortization of intangible assets, a noncash charge. 

Cash and cash equivalents of $216.0M   

Debt of $3.563+B

Guides 2024 adjusted E.P.S. to $1.00-$1.04.

Maximum Position Given Risk Assessment Reflected in Stock Chart: 50 shares

E. Restarted BOTZ - Bought 5 at $31.33 - Schwab Account: 

Quote: Global X Robotics & Artificial Intelligence ETF

Cost: $156.63

I mentioned this ETF in my last post. I went ahead and started a position.   

Last Sell Discussions: Item # 1.B. Eliminated BOTZ - Sold 9 at $26.53  (5/20/23 Post)(profit snapshot = $15.39); Item # 1.J. Sold 5 BOTZ at $39.02 (10/22/21 Post)(profit snapshot = $74.52)

Sponsor's website: Global X Robotics & Artificial Intelligence ETF (BOTZ)

Expense ratio: .68% 

Number of Holdings: 44 as of 7/15/24

Top 10 Holdings: 

Dividends: Paid semiannually and viewed as irrelevant. 

3. Corporate Bonds: 

A. Bought 2 Kite Realty 4% SU Maturing on 3/15/25 at a Total Cost of 98.828:  

Issuer:  Kite Realty Group (KRG) 

This bond was originally issued by Retail Properties which was acquired by Kite. 

KRG SEC Filings 

SEC Filed Earnigns Press Release for the Q/E 3/31/24 "As of March 31, 2024, the Company owned interests in 180 U.S. open-air shopping centers and mixed-use assets, comprising approximately 28.1 million square feet of gross leasable space."

10-Q for the Q/E 3/31/24 Unsecured senior notes are listed at page 19. This note is the next SU note to mature. 

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa2/BBB

YTM at Total Cost: 5.778%

Current Yield at TC = 4.047%

I now own 6 bonds. 

B. Bought 2 FS KKR 3.4% SU Maturing on 1/15/26 at a Total Cost of 96.04: 

Issuer:  FS KKR Capital Corp. (FSK) - Externally Managed BDC

I own the common shares. 

Last FSK Discussion: Item # 3.B. Eliminated 1 of 3 Duplicate Positions in FSK - Sold 12 at $20.35 (9/16/23 Post)(profit snapshot = $14.71) 

FSK SEC Filings 

SEC Filed Earnings Report for the Q/E 3/31/2 

I am replacing 2 FS KKR SU notes that matured on 7/15/24: 

The total redemption amount for this bond was $400M. 

Finra Page:  Bond Page | FINRA.org

Credit Ratings: Baa3 by Moody's and BBB- by Fitch.

Fitch Affirms FS KKR Capital Corp at 'BBB-'; Outlook Stable

YTM at Total Cost: 6.216%

Current Yield at TC = 3.54%

Last Bond Offering (6/24): Prospectus for $600M 6.875 SU Notes maturing in 2029 sold at 98.858 

Debt as of 3/31/24: 

The YTM of 6.216% indicates an opinion that this bond is more risky than its assigned credit ratings of Baa3/BBB-. 

4. Treasury Bills Purchased at Auction: 

High Rate vs. Investment Rate | Treasury Bill Pricing & Interest Rates Explained! - YouTube

In my Schwab account, I am considering lowering the amount of treasury bill purchases and to redirect some proceeds from maturities into term corporate bond ETFs. Those ETFs have all of their owned bonds mature in a specific year and then liquidate late in the year by delivering the proceeds to shareholders. Expense ratios for the ones that I am looking at now are generally .1%. The concern expressed in that minor shift is that treasury bill yields will turn down soon.  

A. Bought 5 Treasury Bills at the 7/15/24 Auction:

91 Day Bill

Matures on 10/17/24 

Interest: $65.66

Investment Rate: 5.337%

B. Bought 7 Treasury Bills at the 7/15/24 Auction - 3 Accounts: 

180 Day Bill

I am shifting more income tax recognition into 2025 when I currently expect lower income from treasury bills and treasury money market funds compared to 2024.  

Matures on 1/16/25

Interest: $176.41

Investment Rate: 5.185%

C. Bought 7 Treasury Bills at the 7/17/24 Auction - Two Accounts: 

119 Day Bill

Matures on 11/18/24 

Interest: $118.92

Investment Rate: 5.296%

5. REIT Equity Preferred Stock: 

A. Added to NSAPRA - Bought 5 at $22.35: 

Quote: NSA-PA

Cost: $111.75

Issuer: National Storage Affiliates Trust (NSA)- An internally managed storage REIT

Website: National Storage Affiliates Trust (NSA)

I own the common stock. 

Last NSA Discussions: Item # 2.C. Added to NSA - Bought 5 at $34.95 (5/3/24 Post); Item # 2.B. Added to NSA - Bought 5 at $35.25 (4/26/24 Post) 

NSA SEC Filings

SEC Filed 2024 First Q. Report 

Investment Category: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks, part of the Equity REIT Common and Preferred Stock Basket Strategy

Last Discussed: Item # 3.C. Added to NSAPRA - Bought 5 at $22.05; 5 at $21.5 (4/19/24 Post) 

Prospectus 

REIT Equity Preferred Stock, senior only to common stock in the capital structure 

Par Value: $25

Coupon: 6%

Dividends: Paid quarterly and cumulative. 

New Average cost per share: $22.45 (30 shares)

Yield at New AC = 6.68%

Last Ex Dividend: 6/14/24

6. Bought 1 TIP in Roth IRA Account Maturing on 4/15/29: 

Coupon: 2.125%

Purchase Price: 100.938

Real Yield at Purchase Price: 1.917%

Inflation Factor: 1.01452

The inflation factor adjusts the principal amount higher by the CPI increase since the TIP was originally offered.  

Principal Amount:  $1,009.38 (100.938 x. 10) 

Principal Amount Paid to Seller: $1,024.03 (1,009.38 x. inflation factor of 1.01452)

Accrued Interest Paid to the Seller: $5.42

I will receive the entire 6 month interest payment but have to split that with the seller which is accomplished through the accrued interest payment. 

5 year breakeven inflation rate on 7/15/24: 2.2%

5-Year Breakeven Inflation Rate-St. Louis Fed

Breakeven Inflation Rate: The average annual CPI until maturity required for the purchase of the TIP to equal the yield of a non-inflation protected security bought with the same maturity. The nominal treasury starts out with a higher yield but does not have the accretion to the principal amount resulting from increases in CPI. 

If the actual CPI exceeds the breakeven inflation rate, the buyer would be better off buying the TIP rather than the non-inflation protected treasury maturing on the same date.  

I will own TIPs only in my Roth IRA accounts and am using a ladder approach to and including 2034. I quit trading longer term TIPs back in 2016: 

2016 Eliminations TIPs 2040+ Maturities

Links to some of my historical posts: 

TIP Trading in the Secondary Market

Update On Buying TIPs In The Secondary Market - South Gent | Seeking Alpha

The Mechanics Of Purchasing A TIP In The Secondary Market - South Gent | Seeking Alpha

Advantages and Disadvantages of Treasury Inflation Protected Securities (9/25/2009 Post)

Item # 6 TIP Sales in Roth IRA on 9/8/17 (9/25/17 Post)(profit snapshot = $170.63)  

Item #  1 Sold  3 TIP 1.875% Coupons Maturing in 2019 at 120.45 (5/25/12 Post)(profit snapshot = $838.87) I had bought these TIPs at an auction. The buyer's real yield at the purchase price was at -.89% as reflected in the snapshot. It is important to understand that the price of the TIP will adjust based on changes in the nominal interest rates and the breakeven inflation rate.  When interest rates were rising in 2022-2023, vintage TIPs with low coupons went down significantly in price far more than traceable to changes in the breakeven inflation rates for the various maturities. 

TIP – Performance – iShares TIPS Bond ETF  (As of 7/18/24, the total return in 2022 was at -12.24% even though inflation accretion to the principal amount was high due to problematic inflation. The weighted average maturity was at 7.13 years with an effective duration of 6.51 years)

TIPX – Performance – SPDR® Blmbg 1-10 Year TIPS ETF | Morningstar (The total return in 2022, which includes reinvesting the dividends, was at -7.56%. The shorter duration TIPs performed slightly better than longer term ones. As of 7/18/24, the average weighted maturity was 4.47 with an option adjusted duration of 4.25 years)

7. Cash Flow into Fidelity Account on 7/15/24: 

Corporate Bond Redemptions: $6,000

Interest and Dividend Payments: 

Corporate Bond Interest: $942. 

(The National Rural SU bonds make monthly interest payments. The other corporate bonds pay semiannually. The YTMs for corporate bonds that I am will generally be significantly higher than the coupon or current yield based on cost since I am buying those bonds at discounts to par value and the focus has been on short maturities)  

Common Stock Dividends: $100.72 {primarily from equity REITs- WPC, BNL, CUBE, LXP, which is a duplicate position likely to be sold, and the hybrid REIT STWD and secondarily from BDCs (OBDC & SCM), and regional banks, USB & THFF}

Equity Preferred Stock Dividends: $39.03

CEF Monthly Dividends: $20.45 (the total received each month is close to $300 but spread throughout the month)

CD Interest and Other Dividends: $36.72

Total Interest and Dividends: $1,138.92

Corporate bond interest payments will dominate interest income cash flow on the 15th of each month. 

Tennessee Municipal bond interest will generally exceed corporate bond interest payments each month on the 1st day. 

Bond, CD, treasury bill and treasury note redemptions will occur throughout the each month, as will dividend, CD, and corporate bond interest payments. 

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.