Economy:
The ISM reported last week that its July services PMI rose to 51.4% from 48.8% in June. Any number above 50 indicates an ongoing expansion. The new orders component rose to 52.4% from 47.3%. The employment component rose to 51.1% from 46.1%. Services PMI® at 51.4%; July 2024
While the manufacturing PMI declined further into contraction last month, the service sector is far more important to a continued economic expansion.
Manufacturing Jobs Chart: 12.953M
All Employees, Manufacturing-St. Louis Fed
Service Jobs: 136.877M
All Employees, Service-Providing-St. Louis Fed
The Fed - The July 2024 Senior Loan Officer Opinion Survey on Bank Lending Practices "Regarding loans to businesses, survey respondents reported, on balance, tighter standards and basically unchanged demand for commercial and industrial (C&I) loans to firms of all sizes over the second quarter. Meanwhile, banks reported tighter standards and weaker demand for all commercial real estate (CRE) loan categories."
U.S. consumer giants have one big sales problem: China A number of U.S. consumer product companies have recently reported that their revenues generated in China have significantly weakened in recent months.
Weekly mortgage refinance demand soars 16% as rates sink to lowest level in over a year
For about 15 years now, the refinancing of home mortgages long term at lower rates has been a major contributor to benign consumer spending. Lowering debt service costs means that households have more disposable income after debt service payments to spend without incurring additional debt. The increase in disposable income from lower debt service payments could also be used to increase savings and/or to pay down high cost consumer credit card debt.
Household Debt Service Payments as a Percent of Disposable Personal Income-St. Louis Fed:
Mortgage Debt Service Payments as a Percent of Disposable Personal Income -St. Louis Fed:
 |
| Hight was hit in the 2007 4th quarter at 134+% |
When evaluating these charts, it is important to remember that about 1/3rd of homes are owned free and clear of any debt. The Fed - Housing ("Report on the Economic Well-Being of U.S. Households in 2023-May 2024") So a 134% household debt to disposable income is worrisome since it indicates that too many households with mortgage and other debt are likely under significant economic duress that will impact their ability to service debt or to maintain their spending levels.
Treasury Yield Curve in August 2024:
For reasons that make no sense to me, the Stock Jocks managed to hold onto a good rally to the close. The trigger appears to be a slightly better than expected initial unemployment claims report for the week ending 8/3/24, as I noted in a comment posted earlier today. Weekly jobless claims fall to 233,000, less than expected, in a positive sign for labor market The report for the prior week added to anxiety attack created by last week's jobs report.
+++
Allocation Shifts Discussed in this Post:
Treasury Bills Purchased at Auction: $12,000 in principal amount
Corporate Bonds: None
Tennessee Municipal Bonds: $10,000 in principal amount.
Net Outflow Common Stocks: -$2,805.11
Realized Gain Common Stocks: +$610.95
Inflow Bond ETF (USIG): +277.5
Inflow REIT Equity Preferred Stock (NSA.PRA): +$109.75
Inflow Exchange Traded FM Bond (EMC): +$112.4
Inflow "Preferred" Stock ETF (PFXF): +$170.65
Outflow Leveraged Bond CEF: -$64.12
2024 Net Outflow Stocks/Stock Funds: -$28,232.38
2023 Net Outflow Stocks/Stock Funds: -$27,091.82
Net outflows cover stocks/stock funds discussed in this blog. The total outflow would be somewhat higher.
Berkshire Hathaway earnings 2024 Q2; Warren Buffett's Berkshire Hathaway sold nearly half its stake in Apple Cash and treasury bills at $277+B.
+++
Trump and His Party:
Trump 8/6/24 message on "Truth Social": Reeks of mental illnesses
"What are the chances that Crooked Joe Biden, the WORST President in the history of the U.S., whose Presidency was Unconstitutionally STOLEN from him by Kamabla, Barrack HUSSEIN Obama, Crazy Nancy Pelosi, Shifty Adam Schiff, Cryin’ Chuck Schumer, and others on the Lunatic Left, CRASHES the Democrat National Convention and tries to take back the Nomination, beginning with challenging me to another DEBATE. He feels that he made a historically tragic mistake by handing over the U.S. Presidency, a COUP, to the people in the World he most hates, and he wants it back, NOW!!!"
President: general election : 2024 Polls | FiveThirtyEight
2024 General Election: Trump vs. Harris Polls | RealClearPolling
Kamala Harris raised $310 million for Trump election contest
FIGHT FIGHT FIGHT High-Tops – Trump Sneakers Trump promoted a $299 sneaker that has a picture of Trump with a bloodied face holding his raised fist.
Trump also promoted a "limited edition" Bitcoin sneakers for just $499 per pair. "Grifter-Con-Man-in-Chief Trump introduces his third line of shoes on the market, this time Trump Bitcoin Sneakers
My Video: Trump is a Grifter - YouTube
Trump can not go a day without proving just how repulsive he is and how far he will go to enrich himself.
Trump repeatedly attacks Republican Georgia Gov. Kemp at Atlanta rally - The Washington Post
Geoff Duncan, former Lt. Governor of Georgia, condemns GOP for staying mum on Donald Trump attacks
Trump called the far right republican governor of Tennessee a RINO. Former President Trump calls Tennessee's governor a 'RINO.'
$10M cash withdrawal drove secret probe into whether Trump took money from Egypt - The Washington Post; 'Where did the cash go?': Maddow looks for clues in new report about Trump, Egypt and $10 million - YouTube There is not enough evidence to form an opinion on whether Egypt delivered $10M in cash to Trump, which was the same amount that Trump contributed to his campaign a few weeks earlier, but the matter has not been fully investigated either.
Klepper Asks MAGA About the Shooting, Harris, and Both Parties' VP Noms | The Daily Show - YouTube Ignorant, stupid and easily susceptible to believing what is both demonstrably false and extremely bizarre.
Arizona Republican becomes first fake elector to plead guilty for role in Trump scheme - POLITICO
In a leaked recording, Trump praised the way Governor Walz handled the riots after George Floyd's murder. Uncovered audio of Trump praising Walz contradicts criticisms of riot response - YouTube
PolitiFact | Trump said that Gov. Tim Walz didn’t call in the National Guard in 2020. Walz’s order shows he did. Trump now makes the knowingly false statement that Walz did not call up the National Guard.
Trump blamed Harris for the stock market decline last Monday. I am waiting for him to give her credit for the market's rise on Tuesday and today, 8/8/24. Trump Took Credit For Stock Market Rally But Blamed Kamala Harris When It Started Crashing - Benzinga Of course, Harris had nothing to do with the gyrations of the stock market this week, but demagogues like Trump could care less about facts when it is so easy for him to mislead and misinform.
I have turned off comments to my recent YouTube videos since Trumpsters are flooding the videos with juvenile name calling. All are suffering from incurable Trump Derangement Syndrome. I have yet to read a single comment made by a Trump supporter anywhere that is worth one second of my time to read, or anyone else's who has a remnant of common sense and a functioning brain.
++++
Putin's Autocracy and Kleptocracy:
Losses ∙ Russia ∙ WarSpotting — documented material losses in Russo-Ukrainian war
Putin and his kleptocrats have been a disaster for Russia and will continue to be.
If Russia ends up losing over 1 million of its citizens in Putin's Ukraine War, which has no national security justification, that is a small price to pay from Putin's perspective for him to remain in power and alive. He has no choice now but to continue the war rather than to end it on terms acceptable to Ukraine which he can not offer.
Ukraine claims Russian Rostov-on-Don submarine sunk in Crimea
Big Storm Shadow Strike Hits Factory in Luhansk City - YouTube
Wreckage of Su-34 At Morozovsk Airbase - YouTube
Incursion Into Kursk Regions Strikes 'A Blow To Russia's Image'
++++
1. Tennessee Municipal Bonds:
A. Bought 5 Kingsport, TN 3% GO Maturing on 3/1/2028 at a Total Cost of 98.08:
%203%25%203:1:2028%20.png)
Emma Page (EMMA is the municipal bond equivalent to FINRA except more information is provided at EMMA than at FINRA.)
Principal Amount: $4,904
Accrued Interest Paid to Seller: $64.17
I will receive all of the semiannual interest payment of $75 that will be made on 9/1/24. The net to me for that payment will be $10.83 after deducting the accrued interest payment made to the seller.
Bond Ratings: Aa2/AA
Optional Call: At par value + accrued and unpaid interest on or after 3/1/2026.
Interest Payments: Federally Tax Exempt
Tennessee does not have a state income tax.
YTM: 3.577%
B. Bought 5 Montgomery County 3% GO Maturing on 4/1/2028 at a Total Cost of 99.05:
Credit Rating: AA by S&P
Interest: Federally Tax Exempt
Principal Amount: $4,952.5
Accrued Interest Paid to the Seller: $52.5
Next Interest payment: 10/1/24.
Semiannual interest: $75
I will receive the entire semiannual interest payment but the net to me will be $22.5.
YTM at 3.278%
The bonds can be called at par value + accrued and unpaid interest.
Call protection expired on on 4/1/23.
The difference between my total cost of $4,952.5 and the $5,000 par value is $47.5
This issuer called my 15 GO bonds early back in 2022 that had a 3% coupon and would have matured on 4/1/2027:
For this issuer, I also own 5 bonds that will mature on 4/1/2026.
2. Small Ball Sells:
Equity REIT Common and Preferred Stock Basket Strategy
A. Pare IRM - Sold 3 at $109.83:
Quote: Iron Mountain Inc (IRM) - A REIT
Proceeds: $329.49
On 8/1, there was a price spike higher based on IRM increasing its dividend and reporting better than expected second quarter results. I sold the 3 shares into that rally which I mentioned in a comment published on 8/1.
IRM has more than 240,000 customers worldwide and has a "range of offerings including digital transformation, data centers, secure records storage, information management, asset lifecycle management, secure destruction and art storage."
10-Q for the Q/E 6/30/24 (debt discussed at pages 21-23)
Last Discussed: Item # 2.F. Pared IRM - Sold 2 at $100 (7/26/24 Post)(profit snapshot = $150.29) I discussed the first quarter report in that post. SEC Filed Press Release; SEC Filed Earnings Presentation; SEC Filed Supplemental
Profit Snapshot: $257.45 (8/1/24 sale only; YTD at $407.72 for 5 shares)
New Average cost per share: $22.3 (10 shares)
 |
| Snapshot Intraday on 8/1/24 after pare |
Dividend: Quarterly at $.715 per share ($2.86 annually), last raised from $.65 effective for the 2024 third quarter payment.
Yield at $22.3: 12.825%
Next Ex Dividend: 9/16/24
Last Earnings Report (Q/E 6/30/24):
SEC Filed Press Release; SEC Filed Investor Presentation; SEC Filed Supplemental
Comparisons are to the 2023 second quarter.
Revenue: $1.5B, up 13%
AFFO per share: $1.08, up from $.98
Reconciliation Net Income to FFO:
Reconciliation FFO to AFFO:
2022 Guidance for AFFO per share: $4.39-$4.51
Last Buy Discussions: Item # 2.E. Started IRM in Schwab Taxable Account-Bought 10 at $26.8; 5 at $25.8; 5 at $25.25; 5 at $24.9 (12/5/20 Post); Item # 1.B. Added 3 IRM at $22.99; 2 at $22.31 (6/20/20 Post); Item # 2.F. Added to IRM in Fidelity Taxable-Bought 1 at $26.88; 2 at $26.2; 1 at $25.7; 1 at $25.52; 1 at $24.96 (12/5/20 Post)(substantive discussion); Item # 2.A. Added 1 IRM at $26.46; 1 at $26.07; 1 at $25; 2 at $23.95; 1 at $23.3; 1 at $23.76; 1 at $24.33; 1 at $22.61; 1 at $24.33; 1 at $22.6 and 1 at $21.79 (5/2/20 Post)
IRM Realized Gains to Date = $2,082.86
B. Eliminated Duplicate Position in PDM - Sold 31 at $8.67:
Quote: Piedmont Office Realty Trust Inc. Cl A (PDM) - An Office REIT
Proceeds: $268.61
As of 6/30/24, PDM owned 31 in-service properties and 3 redevelopment properties. The in-service properties have about 15.7M rentable square feet.
Website: Home - Piedmont Office Realty Trust
I owned 6 Piedmont Operating Realty LP 4.45% SU notes that matured on 3/15/24. 4 bonds were called in 2023 and the remaining 2 SU notes were paid off at maturity. The LP notes are guaranteed by PDM.
The refinancing costs have risen compared to that 4.45% SU that was issued in 2014. Prospectus
The Operating LP issued a $400M 6.875% SU note maturing in 2029 during the second quarter. Prospectus
In 2023, the Operating LP issued $200M of 9.25% SU notes maturing in July 2028. Prospectus
Interest costs also increased for borrowings under PDM's credit facilities.
The increase in vacancies and interest costs have pressured cash flow to the downside as discussed below.
Last Discussed: Item # 1.F. Added to PDM - Bought 3 at $6.37; 3 at $6.14 (4/29/23 Post); Item # 1.F. Added to PDM - Bought 5 at $7.03; 5 at $6.52 (3/25/23 Post)
Profit Snapshot: +$45.52
Dividend: Quarterly at $.125 ($.50 annually), slashed from $.21 effective for the 2024 first quarter payment.
Next Ex Dividend: 8/23/24
Last Earnings Report (Q/E 6/30/24):
Comparisons are to the 2023 second quarter.
PDM "leased percentage for its in-service portfolio as of June 30, 2024 was 87.3%, as compared to 87.1% as of December 31, 2023, with the increase attributable to net leasing activity completed during the first six months of 2024, and reflecting the sale of the One Lincoln Park building during the first quarter of 2024 and the reclassification of the 9320 Excelsior and Meridian Crossings projects in Minneapolis, MN to out-of-service as of June 30, 2024. Both projects are being redeveloped into multi-tenant assets following the expiration of the sole tenant lease at each project during the six months ended June 30, 2024."
9320 Excelsior Boulevard - Piedmont Office Realty Trust
One and Two Meridian Crossings - Piedmont Office Realty Trust
Core FFO: $46.751M, down from
Core FFO per share: $.37, down from $.45
AFFO: $27.758M, down from $44.444M (As computed by PDM, AFFO is equivalent to funds available for distribution)
AFFO per share: $.2224
Net Income to AFFO reconciliation: The largest deduction from FFO are maintenance expenditures, which will be high for office REITs, and the non-cash revenue created by the straight line accounting convention.
Interest expense: $29.569M, up from $23.389M
Guidance for 2024:
Sell Discussions: Item # 1.A. Eliminated PDM in Schwab Account - Sold 5 at $18.71 and 34+ at $18 (12/31/21 Post)(profit snapshot = $235.88); Item # 2.H. Eliminated PDM- Sold 10 at $17.95 in Fidelity Account and 10 at $18.02 in Vanguard Taxable Account (1/7/22 Post)(profit snapshots = $128.95)
The impact of the pandemic on the stock price has been severe.
PDM Realized Gains to Date: $410.35
Quote: General Mills Inc. (GIS)
Proceeds: $344.15
GIS Analyst Estimates | MarketWatch
General Mills: Brands overview
SEC Filed Annual Report for the F/Y Ending 5/26/24
Last Discussed: Item # 2.A. Pared GIS - Sold Highest Cost 5 Share Lot at $68.17 (3/22/24 Post)(profit snapshot = $28.61) I discussed the earnings report for the F/Q ending 2/25/24 in that post. SEC Filed Earnings Press Release
Profit Snapshot: $59.15 (8/2/24 sale only)
New Average cost per share: $55.38 (40 shares)
 |
| Snapshot Intraday on 8/2/24 after pare |
Dividend: Quarterly at $.60 per share, last raised from $.59 effective for the 2024 third quarter payment.
Yield at $55.38: 4.34%
Last Ex Dividend: 7/10/24 (own all as of)
Last Earnings Report (F/Q 5/26/24): SEC Filed Press Release
This was the 4th fiscal quarter.
I had an unfavorable reaction to this report.
Net Sales: $4.7B, down 6%
Organic Net Sales: Down 6%
"Fourth-quarter net sales for General Mills’ North America Retail segment were down 7 percent to $2.85 billion, driven by lower pound volume and unfavorable net price realization and mix. Organic net sales were also down 7 percent"
"Fourth-quarter net sales for the Pet segment were down 8 percent to $602 million, driven by lower pound volume and unfavorable net price realization and mix. Organic net sales were also down 8 percent."
"Fourth-quarter net sales for the North America Foodservice segment increased 4 percent to $589 million. Organic net sales were also up 4 percent despite a 3-point headwind from market index pricing on bakery flour."
"Fourth-quarter net sales for the International segment were down 10 percent to $668 million, driven by unfavorable net price realization and mix and a 1-point headwind from foreign currency exchange, partially offset by higher pound volume. Organic net sales were also down 10 percent, with double-digit declines in Brazil and China partially offset by growth in Distributor markets and Europe & Australia."
E.P.S. = $.98, down 5%
Adjusted E.P.S. = $1.01, down 10%.
Reconciliation of GAAP to Non-GAAP:
Fiscal 2025 Guidance: Adjusted E.P.S. down or up 1% compared to $4.52 reported in Fiscal 2024.
Repurchased about 29 million shares in Fiscal 2024 at a $2B cost.
This report militates against reinvesting the dividend or purchasing any additional shares.
Other Sell Discussions: Item # 1.C. Eliminated GIS in Vanguard Taxable Account - Sold 2+ at $80.41 (3/6/23 Post)(profit snapshot = $66.83); Item # 3.C. Pared GIS in Fidelity Taxable Account - Sold 5 at $86.64 (12/13/22 Post)(profit snapshot = $145.71); Item # 6.A. Pared GIS - Sold 5 at $81.64 (11/8/22 Post)(profit snapshot = $118.72); Item # 4.B. Pared GIS in Fidelity Taxable Account - Sold 5 at $80.65 (9/27/22 Post)(profit snapshot = $112.89); Item # 2.B. Sold 2+ GIS at $67.1 and 3 at $69.22 (1/7/22 Post)(profit snapshots = $46.67); Item # 3.B. Sold 1.582 GIS at $64.42 - Eliminated Shares Bought with Dividends (6/4/21 Post)(profit snapshot = $8.09); Item # 1.A. Pared GIS in Fidelity Taxable-Sold 4 at $61.37 (4/17/21 Post)(profit snapshot = $9.95); Item # 1.A. Eliminated GIS-Sold 27+ at $54.86 (3/21/20 Post)(profit snapshot = $426.37); Item # 1.A. Sold 13 GIS at $55.02-Used Commission Free Trade (8/17/19 Post)(profit = $134.13); Item 1.B. Sold Highest Cost GIS lots at $51.69 (4/7/2019 Post); Item #2.A. Sold 10 GIS at $56.18-Used Commission Free Trade (12/21/17 Post) Snapshots of 2007 through 2017 round-trip trades can be found in Item 1.B (+$1,809.99).
The largest single gain was $1,285.51 realized on a 52 share lot in 2016. There have not yet been any realized losses.
Purchase Discussion: The lowest price paid over the past 5 years was $36.75. Item # 5 A. Bought 2 GIS at $40.25, 2 at $39.45, 10 at $38.3 and 5 at $36.75-Used Commission Free Trades (12/29/18 Post)
Realized Gains to Date: +$2,951.27
D. Pared Duplicate Position in ARCC - Sold 4 at $20.95:
Quote: Ares Capital Corp. - Externally Managed BDC
Proceeds: $83.8
SEC Filed 2023 Annual Report (The risk factor summary starts at page 24 and ends at page 50)
Last Discussed: Item # 3.B. Pared ARCC - Sold 2 at $20.36 (1/20/24 Post)(profit snapshot = $14.04); Item # 2.I. Pared ARCC in Schwab Account - Sold 4 at $20.72 (5/12/22 Post)(profit snapshot =
Last 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) Note how rapidly the price declined as investors became increasingly convinced that a recession was developing in response to the pandemic.
Profit Snapshot: +$33.88
New Average cost per share this account: $10.85 (31 shares):
 |
| Snapshot Intraday on 8/1/24 after pare |
Dividend: Quarterly at $.48 per share ($1.92 annually), last raised from $.43 effective for the 2022 4th quarter payment. This is the regular dividend. ARCC has paid in the past special dividends. In 2023, the company paid four $.03 per share special dividends. Four $.02 per share special dividends were paid in 2019.
ARCC Stock Dividend History & Date
Yield at $10.85 AC = 17.7%
Next Ex Dividend: 9/13/24
Net Asset value per share history:
6/30/24: $19.61 10-Q at page 3
12/31/23: $19.24
9/30/23: $18.99 10-Q at page 3
9/30/23: $18.56 10-Q at page 3
9/30/21: $18.52 10-Q
12/31/20: $16.97 10-K
9/30/18: $17.16
12/21/17: $16.65
9/30/17: $16.49 10-Q
12/30/16: $16.45
9/30/16: $16.59
6/30/16: $16.62
3/31/16: $16.5
12/31/14: $16.82
9/30/13: $16.35
3/31/12: $15.47
6/30/10: $14.11
12/31/09: $11.44 10-K
9/30/09: $11.16 10-Q
12/31/08: $11.27
6/30/08: $12.83 10-Q
12/31/07: $15.47 10-K at page 57
9/30/07: $15.74
3/31/05: $14.96
ARCC Realized Gains to Date: $917.36
Goal: As with all BDC stocks, the goal is simply to earn a return in excess of the dividends paid.
6 of the 4.25% SU Maturing on 3/1/25: Bond Page | FINRA.org {Last Purchase: Item # 3.B. Bought 2 ARES 4.25% SU Maturing on 3/1/25 at a Total Cost of 98.544 (3/15/24 Post)}
4 of the 3.25% SU Maturing on 7/15/25: Bond Page | FINRA.org {Last Purchase: Item # 4.B. Bought 2 Ares 3.25% SU Maturing on 7/15/25 at a Total Cost of 97.128 (6/20/24 Post)}
I recently received the proceeds of 2 ARCC SU bonds that matured on 6/10/24:
%20+$66.94%20.png){kind=small}
I recently sold 2 ARCC SU bonds that mature in 2026:
%20+$44.44%20.png)
E. Pared GOOD - Sold 5 at $15.31:
Quote: Gladstone Commercial Corp. (GOOD) - Primarily a Net Lease REIT
Proceeds: $76.55
I sold my highest cost 5 shares.
10-Q for the Q/E 3/30/24 As of 3/30/24, GOOD and its consolidated subsidiaries owned 131 properties totally 16.7M square feet of rentable space. The occupancy rate was 98.7% with a remaining weighted average lease term of 6.9 years.
Management: External
Website: Gladstone Commercial Corporation
GOOD SEC Filed 2023 Annual Report
Last Discussed: Item # 2.B. Eliminated GOOD in my Vanguard Taxable Account - Sold 16 at $12.26 (11/25/23 Post)(profit snapshot = $65.77); Item # 3.B. Eliminated GOOD in Schwab Account - Sold 26+ at $13.33 (7/22/23 Post)(profit snapshot = $128.61)
Profit Snapshot: +$14.2
New average cost per share: $9.15 (45 Shares)
 |
| Snapshot Intraday on 7/31/24 after pare |
Dividend: Monthly at $.10 per share, cut from $.1254 per share effective for the January 2023 payment. One cause was the amount of variable rate debt priced at spreads to SOFR. As interest rate costs rose, FFO is reduced and consequently there is less cash flow support for the dividend.
Dividend History-Gladstone Commercial Corporation (GOOD)
Yield at $9.15: 13.11%
Next Ex Dividend Date: 8/21/24
Gladstone Commercial Provides a Semi-Annual Business Update (7/10/24). Portfolio occupancy was at 98.5%. The REIT sold 4 office buildings.
2024 1st Q Earnings Report (Q/E 3/31/24): Gladstone Commercial Corporation Reports Results for the First Quarter Ended March 31, 2024
Core FFO available to common shareholders: $13.944M
Core FFO per share: $.34
The company has not yet reported its second quarter results.
2024 2nd Q. Earnings Report (Q/E 6/30/24): Released after I pared the position.
Revenue: $37.057M
FFO and Core FFO per share $.36, up from $.34 in the 2024 first quarter.
Square feet leased: 98.5%
Square feet owned: 16,825,776
Properties 136
"Collected 100% of cash rents due during April, May, and June"
"Purchased a five-property portfolio comprised of 142,125 square feet in the aggregate for $12.0 million at a cap rate of 12.3%"
"Issued 756,214 shares of common stock for net proceeds of $10.6 million"
Other Sell Discussions: Item # 2.B. Pared GOOD in Fidelity Account - Sold 8 at $16.69 (2/5/23 Post)(profit snapshot = $14.77); Item # 3.F. Pared GOOD - Sold 2.197 shares at $20.8 and 2.352 shares at $20.84 (6/4/21 Post)(profit snapshot = $20.77); Item 1.M. Pared GOOD-Sold 12 at $18.72 and 10 at $19.76 (6/20/20 Post)(profit snapshot = $48.17); Item # 1.C. Eliminated GOOD in Schwab Account-Sold 50+ at $20.88 and Item # 1.D. Sold Highest Cost GOOD Share in Fidelity Account at $21.36 (3/3/19 Post)(profit snapshots = $165.33)
Preferred Stock: I prefer owning a preferred stock issued by GOOD whose dividend can not be cut, but only deferred after the cash common share dividend is eliminated. Gladstone Commercial Corp. 6.625% Pfd. Series E Stock (GOODN); Prospectus {dividends paid monthly, last discussed at Item # 2.C. Added to GOODN - Bought 10 at $18 (7/22/23 Post) and Item # 1.E. Added to GOODN - Bought 10 at $18.25 (7/8/23 Post)}
GOODN taxable accounts:
50 shares in my Schwab account with an average cost per share of $18.3 (yield at 9.05%)
20 shares in my my Fidelity Account at a $18.7 AC per share (yield at 8.86%)
10 shares in my Vanguard Account with a $17.3 AC per share (yield at 9.57%)
GOOD Realized Gains to Date: $395.25
F. Eliminated Duplicate Position in PSEC - Sold 40 at $5.46:
Quote: Prospect Capital Corp. (PSEC) - Externally Managed BDC
Proceeds: $218.55
Website: Prospect Capital Corporation
Profit Snapshot: Net of $11.59
Last Discussed: Item # 1.I. Added to PSEC in Fidelity Account - Bought 10 at $5.06 (11/4/23 Post)
Dividend: Monthly at $.06 per share. The last change was a cut from $.0833 to $.06 effective for the October 2017 payment. The October 2013 dividend was at $.110225.
PSEC Dividend History | Nasdaq
Net Asset value per share history:
Unfavorable IMO over its history as a public company. I would make some allowances for PSEC being a public company when the Near Depression hit in 2008.
3/31/24: $8.99 10-Q at page 4
12/31/23: $8.92
6/30/23: $9.24
3/31/23: $9.48 10-Q at page 4
12/31/22: $9.94
12/31/21: $10.01
Item # 2.F. Eliminated PSEC in Two Taxable Accounts - Sold 20 at $7.39; 20 at $7.4 ( Post)(profit snapshot = $95.56, contains snapshots of trades that were not discussed); Item # 1.G. Sold 5 PSEC at $8.12 (9/24/21 Post)(profit snapshot = $13.71); Item #1.P. Multiple Small Ball Purchases of PSEC-Sold 105 and Kept 42+ (2/27/21 Post)(profit snapshot = $38.88); Item # 1.N. Sold All PSEC Shares Purchased with dividends at $7.8 (4/17/21 Post)(profit snapshot = $46.97); Item # 7. Sold 100 PSEC at $10.65 -RI Account_(9/6/14 Post)(profit snapshot = $30.99); Item # 2 Sold 100 PSEC at $10.83-RI Account (6/1/12 Post)(profit snapshot = $60.47); Item # 1. Sold 100 PSEC at $11.36 - Regular IRA Account (6/19/12 Post)(profit snapshot = $39.6); Item # 2 Sold 50 PSEC at $11.5-IRA Account (1/14/11 Post (no profit snapshot); Item # 2. Sold 50 PSEC In IRA at $12.16 (3/8/2010 Post)( net profit = $68.04) Two transactions in retirement accounts netted +$128.51 and were not discussed.
Goal: Any total return before any ROC adjustment to the tax cost basis in excess of the dividends paid.
G. Eliminated Duplicate Position in CVI - Sold 9 at $28.85:
Quote: CVR Energy Inc. (CVI)
Proceeds: $259.65
"CVR Energy is a diversified holding company primarily engaged in the renewables, petroleum refining and marketing business as well as in the nitrogen fertilizer manufacturing business through its interest in CVR Partners. CVR Energy subsidiaries serve as the general partner and own 37 percent of the common units of CVR Partners."
CVI Analyst Estimates | MarketWatch
Last Discussed: Item # 2.A .Added to CVI - Bought 5 at $24.42 (7/19/24 Post); Item # 1.C. Added to CVI - Bought 5 at $27.7; 5 at $27.1; 5 at $26.7 (6/7/24 Post)
Profit Snapshot: $26.15
Dividend: Quarterly at $.50
Cash Dividends | CVR Energy, Inc.
Next Ex Dividend: 8/12/24
Last Earnings Report (Q/E 6/30/24): SEC Filed Press Release
GAAP E.P.S. $.21
Adjusted E.P.S. $.09, down from $1.64 in the 2023 second quarter.
Refining margins were weak in the 2024 second quarter and that was anticipated. Adjusted refining margin for the 2nd Q. was $9.81 compared to $20.27 for the 2023 second quarter. The decrease was "primarily due to a decrease in the Group 3 2-1-1 crack spread".
Another negative factor during the quarter was a fire at the Wynnewood refinery.
The adjusted E.P.S. number of $.09 was better than the consensus estimate of -.22, which was not a reason IMO for a share price increase of $1.81 on 7/30.
Remaining CVI Taxable Account position: 35 shares with an AC per share at $27.13
Quote: State Street Corp. (STT)
Proceeds: $343.5
STT Analyst Estimates | MarketWatch
Profit Snapshot: $81.63
Last Discussed: Item # 1.N. Added to STT - Bought 1 at $64.01; 1 at $63 (11/4/23 Post); Item # 2.F. Started STT - Bought 1 at $68.29; 1 at $66.52 (7/22/23 Post) I would consider restarting a small ball position at less than $70.
Dividend: Quarterly at $.76 per share, last raised from $.69 effective for the 2024 4th quarter payment. In 2014, the quarterly dividend was at $.30 per share.
State Street Corporation (STT) Stock Dividend History & Date
Next Ex Dividend: 10/1/24
Last Earnings Report (Q/E 6/30/24):
SEC Filed Earnings Press Release
Net Income: $711M
E.P.S. $2.15, down from $2.17 in the 2023 second quarter
AUM: Assets Under Management
AUC/A: Assets under custody and/or administration
Current Position: None
I. Eliminated Duplicate Position in KHC - Sold 6 at $35.48 -Fidelity Account:
Proceeds: $212.86
KHC Analyst Estimates | MarketWatch
KHC SEC FilingsLast Buy Discussions: Item # 1.F. Added to KHC in Schwab Account - Bought 4 at $31.92 (7/5/24 Post); Item # 2.B. Added to KHC - Bought 5 at $33.1; 1 at $32.3 (6/20/24 Post); Item # 1.C. Added to KHC - Bought 1 at $31.77; 2 at $31.5; 3 at $31.17; 2 at $30.9 (10/21/23 Post)
Last Sell Discussion: Item # 2.E. Pared KHC - Sold 6 at $38.34 - Schwab Account (1/12/24 Post)(sold highest cost lots, profit snapshot = $16.81)
Profit Snapshot: $17.51
Dividend: Quarterly at $.40 per share, slashed from
Next Ex Dividend Date: 8/30/24
Last Earnings Report (F/Q ending 6/29/24):
SEC Filed Earnings Press Release
"Organic net sales decreased 2.4 percent versus the prior year period. Price increased 1.0 percentage points versus the prior year period, with increases in the North America and Emerging Markets segments partially offset by lower price in International Developed Markets. Favorable price was primarily due to pricing taken in certain categories to mitigate higher input costs. Volume/mix declined 3.4 percentage points versus the prior year period, with declines in the North America and International Developed Markets segments partially offset by volume/mix growth in Emerging Markets. Unfavorable volume/mix was primarily due to waning consumer sentiment." (emphasis added)
GAAP E.P.S. $.08
Adjusted E.P.S. $.78, down from $.79 from the Q/E 6/30/23
GAAP to Non-GAAP Reconciliation: The primary add back was $.70 per share in impairment charges.
2024 guidance: Adjusted E.P.S. $3.01 - $3.07
Remaining KHC Shares - Taxable Account: 35 with an average cost per share at $32.83.
Analyst Reports (available to Schwab customers)ai
Morningstar (7/31/24): 5 stars with a fair value of $57 and a narrow moat.
S&P (7/31/24): 4 stars with a 12 month PT of $41.
Argus (6/3/24): Hold
Other Recent Reports: I do not have access to these report published on 8/1/24:
Citigroup adjusted its price target to $41 from $38
Wells Fargo adjusted its price target to $35 from $34
JPM adjusted its price target to $38 from $37
BofA adjusted its price target to $40 from $38
Remaining KHC Taxable Account Position: 35 shares at average cost per share of $32.83.
J. Pared O - Sold 2 at $58.77; 3 at $59.38:
Quote: Realty Income Corp. (O) - A Retail Net Lease REIT
I sold my highest cost shares.
Proceeds: $407.43
Website: Homepage | Realty Income
Last Discussed: Item # 1.C. Added to O - Bought 1 at $52.2; 1 at $51.07 (5/31/24 Post) I discussed the 2024 first quarter report in that post. SEC Filed Press Release and SEC Filed Supplemental I also discussed in that post actual and potential problems with store closures.
Profit Snapshots: +$14.78
New Average cost per share: $51 (25+ shares)
 |
| Snapshot Intraday on 8/5/24 after last pare |
The AC was reduced from $52.31 before the two pares.
Dividend: Monthly at $.263 ($3.156 annually), last raised from $.2625 effective for the July 2024 payment. The monthly dividend was at $.1828 in July 2014. While this REIT has been increasing its dividend rate, the rate of growth is small.
Dividend Payment Information | Realty Income
I have turned off dividend reinvestment. If and when that option would likely reduce my average cost per share, I will consider turning it back on.
Yield at New AC of $51: 6.188%
Last Ex Dividend: 8/1/24 (owned all as of)
Last Earnings Report (Q/E 6/30/24):
SEC Filed Earnings Press Release
FFO: $929.1M or $1.07 per share
AFFO: $921.1M or $1.06 per share
As a net lease REIT, the FFO and AFFO numbers will be close together.
Reconciliation Net Income to AFFO:
K. Pared EQR - Sold 2 at $70.11:
Proceeds: $140.22
Apartment units as of 6/30/24: 77,054 with physical occupancy at 96.4%.
I sold my highest cost 2 shares.
EQR is a component of the S&P 500.
Website: Home | EquityApartments.com
Corporate Profile | Equity Residential
Last Discussed: Item # 2.D. Added to EQR - Bought 1 at $59.82; 1 at $59.55; 1 at $59.2; 1 at $58.75 (2/2/24 Post)
Profit Snapshot: $18.29
New Average cost per share: $58.95 (5 shares), reduced from $59.62
 |
| Snapshot Intraday on 8/5/24 after pare |
Dividend: Quarterly at $.675 per share ($2.7 annually), last raised from $.6625 effective for the 2024 second quarter payment. In the 2014 second quarter, the dividend was $.426.
Dividends | Equity Residential
Yield at $58.95 AC: 4.58%
Last Ex Dividend: 7/1/24 (owned all as of)
Last Earnings Report (Q/E 6/30/24):
Revenues: $734.163M
FFO per share: $1.8
Normalized FFO per share: $1.91
Reconciliation Net Income to Normalized FFO:
I do not view FFO as the most important cash flow number for apartment REITs. The most important cash flow number, which EQR does not provide, is funds available for distribution (FAD) or sometimes referred to as cash available for distribution (CAD). Routine maintenance expenditures are deducted from FFO to arrive at FAD and those expenses are high each quarter for apartment REITs.
EQR only provides this information about routine maintenance expenditures (no enhancement to the property values):
For the first six months of 2024, EQR reported maintenance expenditures at $61.815M:
L. Pared NNN - Sold 1+ shares at $46.18:
Quote: NNN REIT Inc. - A net lease REIT similar to Realty Income (O).
I sold the fractional shares purchased with 2 quarterly dividend payments. I have turned off dividend reinvestment after receiving those fractional shares. Profitably selling shares purchased with dividends, particularly when I have turned of the dividend reinvestment option, is part of my stock risk mitigation strategy.
Proceeds: $47.61
Retail Properties | Our Portfolio | NNN REIT
Last Buy Discussion: Item # 2.F. Added to NNN - Bought 1 at $37.63; 1 at $36.67; 1 at $35.32; 2 at $34.95 (9/30/23 Post)
Profit Snapshot: +$7.74
New Average cost per share: $40.36 (35 shares)
 |
| Snapshot Intraday on 8/2/24 after pare |
Dividend: Quarterly at $.58 per share ($2.32 annually), last raised from $.565 per share effective for the 2024 third quarter payment. In the third quarter of 2014, the dividend was at $.42. Dividend growth has been steady but slow in percentage amounts.
Yield at $40.36 AC = 5.75%
Last Ex Dividend Date: 7/31/24 (owned all as of)
Last Earnings Report (Q/E 6/30/24):
FFO = $152.38M
FFO per share: $.83
AFFO = $153.596
AFFO per share: $.84, up from $.80 in the 2023 second Q.
Reconciliation Net Income to Core FFO:
When calculating FFO, the $17.621M gain from property sales is deducted from net income and the noncash depreciation expense of $62.391M is added to net income. The general idea is to come up with a cash flow number for real estate operations.
Reconciliation FFO to AFFO:
As a net lease REIT, maintenance expenditures are tenant obligations. AFFO and FFO will be close together in amounts.
Occupancy: 99.3%
Weighted average debt maturity: 12.6 years.
SU Bonds: I owned 2 NNN SU bonds that matured on 6/15/24. Item # 3.F. Bought 2 NNN REIT 3.9% SU at a Total Cost of 98.204 (6/10/23 Post)
%20+$35.92%20.png){kind=small}
M. Sold 1 K at $72.69:
Quote: Kellanova (K)
Proceeds: $72.69
K Analyst Estimates | MarketWatch
Kellogg split into two companies: WK Kellogg Co. (KLG) and Kellanova (K). KLG ended up with the cereal businesses. Kellogg Board Approves Separation into Two Companies, Kellanova and WK Kellogg Kellanova kept the K symbol. My earlier K symbol links include only Kellogg pre-split.
I previously eliminated my KLG position. Item # 2.C. Eliminated KLG - Sold 10 at $16.82 (3/22/24 Post)(profit snapshot = $66)-Item # 2.K. Started KLG - Bought 10 at $10.22 (11/11/23 Post)
KLG has the Kellogg cereal business while Kellanova received the snacks and other non-cereal businesses. (e.g. Pringles, Pop-Tarts, Eggo, Club crackers, Cheez It, Zesta Crackers, RxBar, Morningstar plant based meals, Kellanova's Brand Offerings)
The Kellanova stock popped on 8/5/24 based on news reports that Mars was interested in acquiring it. Kellanova sale: Stock climbs on reports of Mars interest
Profit Snapshot: $23.06
Last Earnings Report (F/Q ending 6/29/24): SEC Filed Press Release
GAAP E.P.S. = $1, up from $.85.
The stock is not currently trading based on earnings but on speculation that the company will be acquired by Mars.
N. Pared BHK - Sold 5+ shares at $11.36:
Quote: BlackRock Core Bond Trust Overview - A Leveraged Bond CEF
Proceeds: $64.13
I sold only fractional shares purchased with dividends at a cost higher than $10 using the specific identification cost method. All shares were sold profitably.
The price for this leveraged bond ETF recently moved from a discount to net asset value per share to a premium. That will generally cause me to sell some shares.
Leveraged at about 35.04% as of 6/28/24; leverage would have produced negative results in 2022-2023 as the cost of borrowings went up and the value of securities bought with borrowed money went down.
Last Discussed: Item # 2.A. Added to BHK - Bought 5 at $10.56; 5 at $10.33 (5/27/23 Post)
SEC Filed Annual Report for the period ending 12/31/23 A list of BHK's holdings starts at page 18 and ends at page 46. Leverage is achieved through reverse repurchase agreements as described at pages 148-149. The borrowings will be based on short term rates. For 2023, the weighted average interest rate paid by BHK on borrowed funds was 5.12%. As the FED cuts the FF rate range, this cost will come down. The ideal scenario for a leveraged bond fund is to have the cost of borrowings go down as the value of securities bought with borrowed money go up.
BlackRock Core Bond Trust - SEC Filing, holdings as of 3/31/24
Sponsor's website: Core Bond Trust | BHK
Credit Quality as of 6/28/24: While this fund is classified as an investment grade bond fund, it will maintain a significant weighting in junk rated bonds as shown in the following snapshot.
Effective Duration as of 6/28/24: 9.43 years.
Profit Snapshot: +$4.76
New average cost per share: $10.68 (95+ shares)
 |
| Snapshot Intraday on 8/2/24 after pare |
I have turned off dividend reinvestment.
Dividend: Monthly, currently at $.0746 per share ($.8952 annually)
Yield at $10.68 AC = 8.382%
Data Date of 8/2/24 Trade:
Closing Net Asset value per share: $10.96
Closing Market Price: $11.33
Premium: +3.33%
Average 3 Year Discount: -1.74%
Sourced: BHK - CEF Connect
Last Elimination: Item # 3.A. Sold 100 BHK at $12.74 (1/20/19 Post)(profit snapshot = $63)
Other Sell Discussions:
Item # 1 Sold Remaining BHK at $13.07 Update For CEF Basket Strategy As Of 3/21/16 - South Gent | Seeking Alpha (profit snapshot = $28.17)
Item # 4 Sold 200 of 300 BHK at Update For CEF Basket Strategy As Of 2/26/16 - South Gent | Seeking Alpha (profit snapshot = $47.43)
Pared Interest Rate Risk Exposure In Roth IRA: Sold 300 ACG At $7.81 And 200 BHK At $13.86 - South Gent | Seeking Alpha (profit snapshot = $99.55)
Item # 1 Sold 200 BHK at $13.86-Taxable Account-Completes BHK Transition to Roth IRA (1/14/15 Post)(profit snapshot = $75.23)-Item # 1 Bought 200 BHK at $13.4 (8/23/14 Post)
Sold All of the Bond CEF BHK at $14.058 (2/21/12 Post)(profit snapshot = $68.3)
Total BHK Trading Profits: $386.44
3. Treasury Bills Purchased at Auction:
A. Bought 5 Treasury Bills at the 8/5/24 Auction:
%2011:7:24.png){kind=small}
91 Day Bills
Mature on 11/7/24
Interest: $64.14
Investment Rate: 5.212%
B. Bought 2 Treasury Bills at the 8/5/24 Auction:
%202:6:25.png){kind=small}
182 Day Bills
Matures on 2/6/25
Interest: $47.52
Investment Rate: 4.881%
C. Bought 5 Treasury Bills at the 8/7/24 Auction:
%2012:10:24%20.png){kind=small}
119 Day Bills
Mature on 12/10/24:
Interest: $82.47
Investment Rate: 5.144%
4. Exchange Traded Bonds:
A. Added to EMP in Schwab Account - Bought 5 at $22.48:
Cost: $112.4
Issuer: One of the wholly owned operating subsidiaries of the utility holding company Entergy Corp. (ETR)
Last Buy Discussions: Item # 7.A. Added to EMP in Fidelity Account Bought 5 at $21.92 (6/14/24 Post); Item # 6.A. Added to EMP in Vanguard Taxable Account - Bought 5 at $22.15; 5 at $22 (12/16/23 Post); Item # 4.A. Added to EMP in Schwab Account - Bought 5 at $22.18 (12/9/23 Post)
Average cost per share this account: $21.83 (45 shares)
Yield at $21.83: 5.61%
(.049% coupon x. $25 par value = $1.225 annual interest per share ÷ $21.83 average cost per share = 5.6115%)
Last Ex Interest Date: 6/28/24
EMP Realized Gains to Date: $464.90; Item # 5.A. Pared EMP-Sold 5 at $26.84 (6/27/20 Post); Item # 4.A. Eliminated EMP-Sold 70 at $24.87 (5/1/19 Post)(profit snapshot = $207.92); Item # 2.B. Sold 30 EMP at $24.44 (2/13/19 Post); Item # 2.A. Sold 50 EMP at $24.47 (7/22/17 Post)(profit snapshot = $66.98)
5. Equity Preferred Stocks:
A. Added 5 NSAPRA at $21.95:
Issuer: National Storage Affiliates Trust (NSA) I own the common stock.
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)
REIT Equity Preferred Stock
Par Value: $25
Coupon: 6%
Optional Call: At par value + accrued and unpaid dividend on or after 10/11/22.
Maturity: None, potentially perpetual
Stopper Clause: Standard (company must eliminate the cash common share dividend before deferring payment of the preferred dividend)
Dividends: Paid quarterly and cumulative.
New Average cost per share: $22.38 (35 shares)
 |
| Snapshot Intraday on 8/5/24 after add |
Yield at $22.38 AC = 6.7% (.06% x. $25 par value = $1.5 per share in annual dividends ÷ $22.38 average cost per share = 6.7%)
Equity REITs are pass through entities and consequently none or almost none of the dividends paid by the common or preferred shares will be classified as qualified.
2023 Tax Classification of NSAPRA Dividends:
No part of any dividend payment was classified as qualified.
National Storage Affiliates Trust Announces Tax Treatment of 2023 Distributions
6. Bond ETFs:
A. Added 5 USIG at $51.50:
Quote iShares Broad USD Investment Grade Corporate Bond ETF Overview
Cost: $257.5
Sponsor's website: iShares Broad USD Investment Grade Corporate Bond ETF | USIG
Expense ratio: .04%
Number of Holdings: 10,360
Effective Duration: 6.74 years
Credit Quality:
New Average cost per share: $52.26 (35+ Shares)
 |
| Snapshot Intraday on 8/5/24 after add |
Dividend: Paid monthly at a variable rate
 |
| Snapshot Intraday on 8/6/24 after add |
PFXF Realized Gains to Date: $185.45
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.
In Item # 2.A., I added a snapshot in my IRM discussion that shows the reconciliation of FFO to AFFO. The post as originally published only had the snapshot of net income to FFO.
ReplyDeleteGold and crude oil have made meaningful up moves today. This is the first clear indication that investors are becoming more concerned about an imminent escalation in the ongoing Middle East conflict involving Israel, Iran, Hamas and Hezbollah.
ReplyDeleteGold Continuous Contract
$2,511.20 +$ 37.80 +1.53%
Last Updated: Aug 12, 2024 at 3:35 p.m. EDT
https://www.marketwatch.com/investing/future/gc00
Crude Oil WTI (NYM $/bbl) Front Month
$79.76 +$2.92 +3.80%
https://www.marketwatch.com/investing/future/cl.1
Thanks for all the blog post info!
ReplyDeleteMy dad said even Russia warned Iran. It seems unlikely that Iran's aiming for an escalation Instead Iran will sacrifice Hizbollah and Hamas to have them attack, but avoid direct war.
Tonight/Tomorrow is Tisha b'av. It's memorializing the destruction of the 1st and 2nd temples. The start of the Inquisition was also the same date. Observant people fast. Why are Jewish holy days picked for attacking?
Media's coverage of the assassination's been confusing. He wasn't remotely moderate. He was a terrorist architect of Oct 7th massacre, and stopped hostage deals for the over 100 hostages left.
____
I finally got home again and figured out my taxes so I know how much 401k to covert. I'm ready; the significant pullback can happen any time!
I started looking at all the mutual funds offered. Lots of interesting ones. I usually buy ETFs. Outside the 401k, buying a Fidelity fund at Vang costs $20, at Schwab costs $75. Buying Vang or others at Fidelity costs $75. ETFs avoids all that. But I want to take time to assess the funds. A few look like they be managed and do quite well.
Got me wondering, for high yield bond fund, if rates come down due to recession, do those fund prices go up similarly to high rated bond funds?.... or does the credit risk in a recession limit how well a HY fund price increases?
Land: Junk bond prices will decline in a recession due to credit risk concerns.
ReplyDeleteThere has been recently some increase in the spread between junk bonds and treasuries that indicate that credit risk concerns are creeping into the junk bond prices.
https://www.reuters.com/markets/rates-bonds/us-junk-corporate-bond-spreads-surge-sign-market-fears-2024-08-05/
I own only one Vanguard mutual fund and that one is closed to new investors.
Vanguard Capital Opportunity Fund Investor Shares (VHCOX)
https://investor.vanguard.com/investment-products/mutual-funds/profile/vhcox
Last Discussed:
Item # 3.D Added $250 to VHCOX:
https://tennesseeindependent.blogspot.com/2023/12/amcx-bstz-elc-emaprcca-eqr-flca-maa.html
As discussed in that post, I have realized $1,777.55 by selling shares and am content now to take the dividends, mostly capital gains distributions, in cash.
Vanguard may be bad at offering No Transaction Fee (NTF) mutual funds sponsored by other firms.
Schwab offers a large number of non-Schwab sponsored mutual funds on an NTF basis. Those offerings would probably exclude the Fidelity and Vanguard sponsored funds but include a large number of non-broker sponsored funds.
My largest mutual fund holding at Schwab is the Permanent Portfolio (PRPFX), whose portfolio allocations are inspired by the Talmud.
Last Discussed at Item # 1.I.
https://tennesseeindependent.blogspot.com/2023/04/amkby-bcbp-bhk-brkl-btz-meta-onb-pnnt.html
Quote:
https://www.marketwatch.com/investing/fund/prpfx?mod=over_search
The fund rose yesterday .53%, probably due to its bond, precious metal and energy stock holdings. The fund maintains a relatively constant 25% allocation to gold and silver bullion.
Schwab allows its customers to start with just a $100 purchase and then can add for as low as $1 per purchase.
I own 4 mutual funds in that account and all of them are available with NTF.
My largest mutual fund holding is the T. Rowe Price Capital Appreciation Fund (PRWCX) which is closed to new investors. I have close to $30K in that one.
https://www.morningstar.com/funds/xnas/prwcx/quote
I have noticed that this mutual fund was sometimes available for purchase on an NTF basis outside of a T.Rowe Price account which I have.
The manager of that fund, David Giroux, also manages a new ETF offering that I do not own but have considered buying:
Capital Appreciation Equity ETF (TCAF)
https://www.troweprice.com/personal-investing/tools/fund-research/etf/TCAF
That firm offers several ETFs, all of which are fairly new offerings:
https://www.troweprice.com/personal-investing/tools/fund-research/etf
Land: I just checked my Schwab account and found that a number of T.Rowe Price funds are offered at NTF including the T.Rowe Price Capital Appreciation fund that I mentioned in my prior comment.
DeleteWhile the T. Rowe Price Capital Appreciation fund is offered NTF at Schwab, I tried placing an order and was not allowed to do so since the fund is closed to new investors, both at T.Rowe Price and elsewhere. If I had opened that fund previously in my Schwab account, I could add to it on a NTF basis. I own it only in my T.Rowe Price account.
DeleteThe Dodge & Cox that got my attention were:
DeleteDODGE & COX INCOME I (DODIX)
Returns, 1,3,5,10 yr
6.90% -0.86% 1.84% 2.62%
Even the down year was better than the other intermediate bonds offered.
For global, avg length 15 yrs
DODGE & COX GLB BD I (DODLX)
7.21% 1.25% 3.66% 3.24%
It appears that the div on that is 5.09%. Inside 401k the only option is to re-invest on div payout day. I'm not crazy about that idea.
___
New to me are DFA, Dimension Finance. These are all avail in ETFs. Reasonable ERs. Eye catching returns (among the investment offerings in the 401k)
DFA US SMALL CAP I (DFSTX)
DFA US TARGET VAL I (DFFVX)
DFA EMERG MKTS VAL I (DFEVX)
DFA INTL VALUE I (DFIVX)
the etfs
DFAS
DFAT
DFEV
DFIV
DISV is small cap value
Land: I would recommend using the Morningstar performance data which you can access without a subscription.
DeleteThese are total return numbers (with dividend reinvested) for DODIX:
1 Year: +9.75%
3 Years: - .35%
5 Years: +1.95%
10 Years +2.72%
https://www.morningstar.com/funds/xnas/dodix/performance
I personally regard those total return numbers over time to be pathetic but they are sufficient for Morningstar, when comparing it to funds that are more pathetic, to give this one 5 stars.
I significantly outperform the results of a bond fund with individual corporate bonds and treasury purchases.
There are several reasons.
A bond fund does not promise to pay you back your initial investment.
When interest rates went up as they did in 2022-2023, bond funds produced negative total returns averaging the two years. DODIX had total returns of -.91, -10.86% and +7.7% in 2021, 2022, and 2023 respectively. So, the fund lost to inflation bigtime and that would be worse if taxes had to be paid on the dividend/interest payments.
When buying individual bonds, I will hold most to maturity, occasionally selling some bonds for profits before maturing and sometimes receiving some premium to par value make whole payments for early calls. I hold all treasury bill purchases at auction to maturity.
Buying corporate bonds at a discount to par value means that I have a total return number locked in and will make a "profit" when the bond matures or is called early plus the interest payments.
Another reason is that my treasury and bond portfolio has a short duration compared to 6.22 years for this mutual fund. That means that the fund's net asset value per share would go down or up about 6.22% based on a 1% directional up or down move respectively in interest rates. So this fund is doing better this year since intermediate term interest rates have drifted down.
My weighted average duration in my corporate bond portfolio is about 1.5 years with multiple maturities every week. I have about $15K due tomorrow.
I had been able to roll over those proceeds into higher yielding ones but that may end soon and has ended in many cases where my YTMs were higher at my purchases than I can get now with new purchases. So my short term bond ladder is starting to work a bit against me.
My total return number for 2021, 2022 and 2023 for corporate bonds and treasuries would be close to 15%. DIDIX may outperform my on a total return basis this year given its longer duration which makes it move more with directional changes in interest rates.
The bond fund can work only when interest rates have peaked and have started a prolonged move down. That is when an investor wants more duration. I have started to nibble on some bond ETFs, both term and open ended, in anticipation that longer duration will work for awhile. The key is getting out of them before interest rates go back up in as sustained way which will maul the fund's total return, taking away all or a good part of the prior positive returns.
Thanks for the fund buying info! The 401k has no TRowe Price offerings. I only checked Fidelity & Vanguard with each other and Schwab and thought that'd be the whole story - didn't think to check TR.
ReplyDeleteThey all charge for Dodge & Cox, & there are two D&C in the 401k that look promising. Some of Fidelity's managed funds did well on returns for 1, 3, 5, and 10 years compared to large cap indices.
I'm thinking about allocating some money for 'momentum' moves, and consider a few managed funds for those. Right now momentum is unwinding so I'm not jumping in. (Be like buying Ark after that great year.)
My trade buys recently... I sold my 6 IWM at approx .50 loss each and 3 SPY for 9.50 gain each for total trade of $26 gain. I wanted to experiment with a small amount. Probably the rally will continue, but this was a trade so I stuck with my plan. I bought one day early. I invested $2700, so gained almost 1% in a couple weeks. That's not bad even though $26 doesn't impress.
Good to know that I actually picked up on and assessed high yields correctly. Thanks!
I forgot about that Talmud advice of 1/3 each. Not bad advice. I don't use those proportions. But I agree: Diversity is important. A rainyday bucket is my 1st advice to those new to the job market. Real estate should never be ignored.
I googled and a couple articles stood out.
This author backtested the idea with scatter charts, and graphs and all. (Such a Talmudic approach to the question raised by a Talmudic passage, lol.)
https://www.recipeinvesting.com/article-how-to-beat-the-sandp-500-using-talmudic-wisdom/
Aish is an Orthodox (ultra Orthodox) site set up to give outreach and info to less observant Jews. It's usually pretty good. They go through the passages a bit.
https://aish.com/88894267/
I think best to wait till tomorrow to write more, when I'm likely to type more coherently. (Sometimes I read a post later, and can't even figure out what the typos were, grrr.)
Land: I have a position in the Permanent Portfolio (PRPFX) since it may hold its value during a major financial meltdown which was the case in 2008.
DeleteI would characterize the fund as using a conservative balanced allocation strategy.
What makes it unusual compared to other balanced funds is the 25% allocation to gold and silver bullion and an allocation to Swiss Francs through owning Swiss government bonds. I could do without the later.
The link to the Talmud's investment advice is primarily a selling pitch.
The Permanent Portfolio does not follow a literal interpretation.
The portfolio manager Roger Gibson suggested using 3 ETFs: BND, VNQ, VTI:
https://portfolioslab.com/portfolio/roger-gibson-talmud
I would not use BND as the "safe" reserve component.
This kind of asset mix, no matter how it is constructed, will underperform during stock bull markets given the relatively low allocation to stocks. That is a given.
The issue is how will it hold up during a prolonged bear market in stocks (e.g. 1966 to July 1982)
Morningstar Page for PRPFX - Rated 4 stars
https://www.morningstar.com/funds/xnas/prpfx/quote
I'm not seeing the word Talmud on the Permanent Portfolio info.
Delete...If you invest in the market to avoid downturns, that person should probably invest in a bank account and bonds (not funds) instead.
The Talmudic language seems to be pointing to rainyday money more so than gold & a bond fund. So I'd say that's an interesting interpretation. Does seem like a sales pitch.
Talmud has several parts. There's Oral Torah that's considered additional to the Written Torah. For instance that's where the info is that Moses was a stutter and needed his brother Aaron as spokesperson. That's all taken as pretty sacred.
There's interpretation of written Torah and of life that's used as moral and legal guidelines. A lot of it is written as debates back and forth between sages (including people who lived 500 years apart.) Notably those debates often don't come to a conclusion and don't tell you which sage 'to listen to.' It's a bit open ended. These passages are just a thought in passing. Otherwise I'd have heard of it regularly, instead of once a long time ago.
Interesting fund to own!
BOA is fading mega caps and buying sp500 equal weighted.
DeleteAnother support that the magman rally is fading. (Magman is the new term I think?)
https://seekingalpha.com/news/4139987-bofa-says-fade-mega-caps-and-smid-and-buy-into-equal-weighted-sp-500?mailingid=36409426&messageid=2900&serial=36409426.192831&source=email_2900&utm_campaign=rta-stock-news&utm_content=link-3&utm_medium=email&utm_source=seeking_alpha&utm_term=36409426.192831
Land: I have heard in the distant past the long time PRPFX portfolio manager Michael Cuggino talk about the Talmud and an investing strategy based thereon initially popularized by Harry Browne in the 1970s.
DeleteI would categorize the PRPFX liberal interpretation of the Talmud as
Land about 1/3rd: Transformed into Hard Assets-Gold, Silver and Swiss Government Bonds:
Business about 1/3rd: Common stocks with significant weightings in that category in REITs and natural resource stocks
Reserve: about 1/3rd currently in short term corporate bonds and treasuries.
See SEC Filing for the period ending 4/30/24
https://www.sec.gov/Archives/edgar/data/357298/000175272424151773/NPORT_DR01_22966729_0424.htm
Sounds fun to have heard at the time. If i get time, I'll check out Harry Browne.
DeleteIf this fund was able to maintain during the 2008 crisis, then it seems there's some wisdom to it.
Though I'm betting the best idea is do well during good times, so that even with a 50% decline you're still doing ok.
Also I stand by my niece's then 8 year old advice that to protect for hard times buy liquor. It'll be even more popular than gold, in her observation of the adult world.
Land: For a fund like PRPFX, the issue is what percentage of a portfolio, if any, is desirable given its unique asset allocation scheme and its negative correlation to an all stock fund like SPY. It is not an all or none assessment. My exposure is at less than .01% of my total portfolio held in brokerage accounts.
DeletePRPFX has generated income and a total return while providing some downside protection from stock market meltdowns.
The fund will significantly underperform SPY during a long term stock bull market given its 33% or so allocation to common stocks and about half of that allocation is in REITs and natural resource stocks.
The fund will likely outperform SPY during a long term secular stock bear market and will occasionally outperform when stocks struggle in a particular year, generally by going down less.
2022 Total Returns
SPY -18.17%
PRPFX -5.49%
And when stocks are not having a robust year, or are down slightly, the performance numbers have been close.
2016
SPY 12%
PRPFX 10.34%
2024 YTD
SPY + 15.13%
PRPFX +12.1%
2018
SPY -4.56%
PRPFX -6.13%
5 Year Annual Average Total Returns through 8/14/24
SPY 15.7%
PRPFX 10.56%
PRPFX is not an alternative to SPY, but a supplement added to mitigate downside risk to whatever decree an investor wants while providing some income and capital appreciation over time.
While I do not have the data, if PRPFX was in existence between 1/1/66 to 7/31/82, the returns would probably have smashed the average annual returns of the S&P 500 with dividend reinvested due to its precious metal exposure (gold and silver soared), the reserve component producing high returns given the exposure to short term treasuries and investment grade corporate bonds as interest rates spiked during that period and other parts of the portfolio doing better including the energy and commodity stock sectors.
The S&P 500 annual average total return starting on 1/1/66 through 7/31/1982 was 5.086% and at -1.813% adjusted for inflation.
https://dqydj.com/sp-500-return-calculator/
Really interesting what niche this portfolio's allocation would do well in.
DeleteI was thinking about those Jan 66 to July 82 over a decade of poor market returns. What caused it? Was it the high interest rates?
Land: The dominant forces that shape stock market returns are easily identifiable and are really not open to dispute, though many investors have a tendency to focus on peripheral matters or to over think what those forces are during a particular time period.
DeleteThe bond market stated a long term bear market around 1950 that ended in 1982. The stock bear market started in 1966 and ended in the 1982 summer at the same time.
The stock and bond bear markets starting in 1966 and lasting for 16 years were both caused by persistent problematic inflation:
https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-index-1913-
That persistent high inflation caused interest rates to be high and to remain very high for a long time.
When inflation was broken by the Volcker FED who raised the FF rate to over 20%, causing a recession, the stock market started a long term bull run lasting until 2020 that produced about a 15% annualized average total returns in the S&P 500 adjusted for inflation, similar to the return in the 1950 to 1966 bull market in stocks.
Another key force producing stellar returns was a prolonged increase in worker and manufacturing productivity, enabled largely by the computer revolution which help to keep inflation in check. And it helped that stocks had gone nowhere for about 16 years. The DJIA peaked at over 1000 in 1969 as I recall and was trading near 850 when the bull market started in August 1982.
The bond bear market started earlier in part due to the FED suppressing interest rates post WWII far below the inflation rate (1945-1951), keeping the ten year treasury yield near 2.5% even though inflation was problematic. When that manipulation ended, the ten year treasury yield settled into a 4% to 5% range even though inflation receded after the Korean War. The normalization of the ten year yield to a 2% to 2.5% spread to the annual inflation rate was sufficient to cause a bear market in bonds, though not a bad one. I described it as prolonged series of paper cuts. The coup de grâce for bond investors would occur in the 1970s and into 1980 through early 1982 when the 30 year treasury yield surged to over 15%. Even as late as 1984, investors were not convinced yet that inflation was in the rear view mirror and a 30 year treasury bond could still be bought with a 14% yield which ultimately produced a real annual yield of about 11.5% or thereabouts.
Ok, it was the inflation.
DeleteSo a recession didn't stop a bear stock market from starting once inflation was under control.
Would imply there's very little like that to worry about now. Inflation is being managed. A recession could happen and slow down stocks, but those usually aren't more than a few years long.
Technology enhanced earnings then, and AI will now.
The biggest difference and caution is that this market's had a strong run, so it could pullback or grow less quickly. But lower interest rates, and room for breath are available & positive (tailwinds).
I won't want to knowingly buy into a 15 year dip. So it helps to know & compare the macro picture.
DeleteLand: Persistent problematic inflation is the ultimate cause of the 1966-1982 bear market. That cause resulted in really high interest rates. The prime rate went over 21% in December 1980. The Fed, when responding to high inflation, will jack up the FF rate and cause a recession.
DeleteThe long term bull market that started in August 1982 had its genesis a consensus opinion forming among stock investors that the cause of the long term bear market was in the rear view mirror. That happened even though the economy was in a recession and the ten year treasury yield was still over 10% but coming down. The recession did not end until December 1982:
Chart:
https://www.nber.org/research/business-cycle-dating
Recessions can occur during long term bull markets but are generally shallow and short as shown in the chart linked above. They will result in valuation resets but the bull market will resume after one provided the strong secular forces powering it are still in play and inflation/interest rates remain benign. It is important to have a kicker like the computer revolution or AI, but one of the most important forces in the past 20 years or so has been that companies with low profit margins and who highly sensitive to economic cycles have become far less important with the emergence of companies with previously unheard of profit margins that have proven to be persistent over long periods and who are nowhere near as sensitive in their profits to economic cycles. Think of company like GM or Alcoa compared to Microsoft, Google, Nvidia.
See my video:
https://www.youtube.com/watch?v=-rGB09arZV8&t=1s
That's all interesting. Especially that shift to big companies with big profit margins.
DeleteSoftware is cost efficient compared to physical products. Nvidia has a huge mote even with competition. There's also a lack of monopoly control (in spite of a few lawsuits). With social media, a lack of paying for basic 'security' of monitoring posts so the crazy people yelling on street corners don't get to be ubiquitous.
Whatever the reasons, this is a new model.
A factor that I never see talked about is easy online & 0 commissions for retail and all investors (outside of trading). That has to have contributed to the market access, and therefore the blueskiesforever enthusiasm that's often present.
I don't have a Seeking Alpha account and am going with only the headline.
ReplyDeleteI have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2024/08/ahhpra-ctra-fax-gct-lgi-nsa-olp-orkly.html