AAP, AIO, ARCC, ATLCP, ATLCZ, DCOM, DG, EMP, MNSBP, STAG, WMB

Economy: 

Personal Income and Outlays, July 2024 | U.S. Bureau of Economic Analysis (BEA):

Annual PCE Inflation: 2.5%, unchanged

Annual Core PCE Inflation: 2.6%

Real Personal Consumption Expenditures Month-To-Month: +.4%

The annual core PCE inflation through July 2023 was reported at 4.2%. Personal Income and Outlays, July 2023

Real disposable income is running lower than real personal consumption expenditures. 

In July, real disposable income increased by only .1%, the same as in June. 

The personal savings rate declined to 2.9% in July from 3.4% in June. 

ADP August Jobs Report: +99,000, the smallest increase since 2021. ADP National Employment Report: Private Sector Employment Increased by 99,000 Jobs in August; Annual Pay was Up 4.8% The median forecast was for +140,000.  

I am not expecting a positive BLS jobs report when it is released on 9/6. The median forecast is currently at +161,000 with a 4.3% unemployment rate, up from the actual +114,000 in July. Employment Situation Summary - 2024 M07 Results If the August report has a 161K increase, a small change higher in the July reported number, and no change in the unemployment rate, that would likely be viewed as a positive report, even though it is not good. A negative report for August would something as bad or worse than the July report linked above.  

Crude oil prices today: WTI erases nearly all 2024 gains (9/3/24)

Mortgage refinance demand is 94% higher than a year ago (9/4/24)

+++

Allocation Shifts Discussed in this Post: 

Treasury Bills Purchased at Auction: $15,000 in principal amount 

Corporate Bonds: $2,000 in principal amount

Tennessee Municipal Bonds: $10,000 in principal amount 

Individual Common Stocks: -$288.69

(consisting of $911.38 in proceeds minus in $622.69 in purchases) 

I would characterize the purchases as dumpster diving (mostly buying falling knives making new 52 week lows that may have some turnaround potential longer term). 

Stock Funds: -$107.95

Outflow Stocks/Stock Funds: -$396.64

Realized Gain Stocks/Stock Funds Discussed in this Post: +$418.32

Equity Preferred Stock: +$457

Exchange Traded Bonds: +$354.1

2024 Outflow Stocks/Stock Funds: -$31,035.11

+++

Trump and His Orwellian Alternate Reality: 

President: general election : 2024 Polls | FiveThirtyEight

2024 General Election: Trump vs. Harris Polls | RealClearPolling

U.S. says Russia funded media company that paid right-wing influencers millions for videos - CBS News; 

Tenet Media: DOJ alleges Russia funded US company "Among the commentators listed on Tenet Media’s website are right-wing personalities Benny Johnson and Tim Pool. Both have millions of subscribers on YouTube and other social media platforms. Pool interviewed Trump on his podcast in May." Both have denied knowing about the Russian money. The Indictment states that at least two of the influencers were misled about the source of funding.  

TENET MEDIA | Fearless Voices Live Here This website is still accessible as of today. 

Two RT Employees Indicted for Covertly Funding and Directing U.S. Company that Published Thousands of Videos in Furtherance of Russian Interests | United States Department of Justice 

Indictment.pdf The two RT employees, the only persons charged, have disappeared. Putin will not turn them over of course. 

The indictment does not identify either the influencers or the U.S. entity that funnelled Russian money to them.

Several news organizations have identified Tenet Media as the organization receiving Russian money and that company, registered in Tennessee, has posted hundreds of videos that parrot Russian talking points and push narratives designed to  benefit Trump in the upcoming election. Right-Wing Influencer Network Tenet Media Allegedly Spread Russian Disinformation-Wired 

Justice Dept. charges two Russian media operatives in alleged scheme - The Washington Post According to this article, Tenet Media was "founded  by conservative commentator Lauren Chen, who goes by Roaming Millennial online and her husband, Liam Donovan". The Indictment alleges that "the company’s co-founders knew the money came from Russia." The article further noted that one of the unnamed influencers, with 2.4 million YouTube subscribers, "received $400,000 a month, plus a $100,000 signing bonus and performance incentives, just for making four videos a week for Tenet."

There can be no doubt that Putin wants to see Trump win in November:

My Videos: Putin-Trump "Peace" Plan for Ukraine - YouTube; Analytical and Fact Based Thinking: Putin and Trump- YouTube; Trump and Putin Part 3; Putin and Trump Part 2 - YouTube; Putin and Trump - YouTube; Mark Esper on Trump's Comment about NATO and Russia - YouTube

Trump Says He Had 'Every Right' to Interfere With Presidential Election

Analysis: Trump is still telling lies he told eight years ago | CNN 

Trump TV Ad Falsely Claims Harris Has 'Unleashed' IRS on Tipped Workers - FactCheck.org

Jimmy Kimmel Recaps All the Crazy Stuff Donald Trump Did Over the Summer - YouTube

Why Trump’s Arlington Debacle Is So Serious - The Atlantic; Trump doubles down on his Arlington Cemetery narrative - YouTube;  'Desecrated by Donald Trump': Widow of former marine calls out Trump’s Arlington photo-op - YouTube; Adam Kinzinger on Trump’s Stunt at Arlington, His Body Odor & Republicans Scared to Speak Out - YouTube

Trump Post Video from Arlington Cemetery - The Washington Post "Trump is seen in the video at the Tomb of the Unknowns and walking among marble headstones as soft guitar music plays and Trump is heard criticizing the Biden administration’s handling of the withdrawal." Trump is taking advantage of their grief for his personal political benefit. 

Trump claimed that this was not a campaign related event and that the videos and photographs made at the gravesites were spontaneous. Trump Campaign Pushes Back at Harris With Gold Star Families’ Statement - The New York Times; White House says Biden and Harris weren’t invited to Arlington Cemetery by families of service members killed during Afghanistan withdrawal 

The Trump campaign issued a statement from several family members of soldiers who were killed in the suicide bombing at the Kabul airport. They claimed that the their deaths would not have happened with Trump as President. There is no factual or reasonable basis for that claim, which sounds like something that originally came out of Trump's mouth.  

The reason for the chaos at the airport was that the Afghan army folded quickly over a few days. U.S. Military Training Of Afghan Army Wasn't Enough To Stop The Taliban-NPR That would have occurred irrespective of who was President at the time. And, it would have happened even if the U.S. had maintained a strong military presence in Afghanistan for 10, 20 or 50 years IMO. 

An historical parallel is the collapse of the more motivated South Vietnamese army in two months after North Vietnam launched its offensive after U.S. troops had withdrawn. Vietnam War - Fall, Saigon, US Withdrawal | Britannica

Trump Calls Journalists “Enemy Of The People” During Pennsylvania Rally Minutes Before Man Storms Into Media Section | Vanity Fair

My Video: Trump's Use of "Fake News" and "Enemy of the People" to Manipulate Voters - YouTube Using those terms are straight out of the authoritarians playbook. 

Trump Calls a Routine Revision of Job Numbers a 'Lie' - FactCheck.org Trump has made a number of false statements about this routine revision of prior jobs numbers that occurs annually. Trump knows that he can tell virtually any lie to those who are willfully ignorant. And, IMO, Trump enjoys manipulating them with false statements. 

Trump Revives - and Further Decreases - His Absurdly Low Estimate of Sea Level Rise - FactCheck.org

This Billionaire Family (KOCH) is Suffocating Rural America - YouTube

One of Trump's billionaire supporters, David Sacks, posted a message on "X" that Trump and RFK Jr. were a "dream team". David Sacks on X: "DREAM TEAM Sacks is part of what is called the PayPal Mafia that includes Elon Musk who also supports Trump. 

Germany’s far-right party AfD set to win German state election in Thuringia, exit polls show | CNN "Branches of the AfD are classified as suspected right-wing extremist by Germany’s intelligence agency and the party’s top candidate in Thuringia, Björn Höcke has been fined twice for using a Nazi slogan." Far right extremism is rising throughout western democracies but has gained the most strength in the U.S. as Trump has mainstreamed this extremism as righteous, patriotic, conservative and normal.   

+++

Putin - A Long Term Disaster for Russia: 

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

Moscow gets Malleted -- Multiple Oil Facilities and Power Plants Hit by Drones Around the Capital - YouTube

Ukraine Hits Moscow Oil Refinery in Massive Drone Barrage | WSJ News - YouTube

17 Russian Vehicles Attack Kurakhove, Donetsk, Just Four Returned - YouTube Putin just threw away the lives of the Russian soldiers lost in that senseless, bound to fail attack. 

Russia’s Youngest Conscripts Unexpectedly See Combat - The New York Times; A social time bomb? Think tank believes most Russians fighting in Kursk are conscripts - YouTube Ukraine claims that it has captured about 600 Russian soldiers in Kursk, most of them are conscripts. 

Putin's Mongolia trip defies ICC arrest warrant: What could happen next? Nothing IMO. 

++++

1. Small Ball Sells: 

A. Pared STAG - Sold 10 at $40.53: 

Quote: STAG Industrial Inc.  (STAG) 

Proceeds: $405.34

Management: Internal   

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Profit Snapshot: $199.74

SEC Filings

2023 SEC Filed Annual Report

Website: Home Page | STAG Industrial

Last Discussed: Item # 1.A. Pared STAG - Sold 10 at $39.55 (7/26/24 Post)(profit snapshot = $189.98) 

Last Buy Discussion: Item # 2. Added to STAG in Interactive Brokers Account-Bought 50 at $17.55-Update For Equity REIT Basket Strategy As Of 1/21/16 - South Gent | Seeking Alpha This lot has been sold. 

New Average cost per share: $16.72 (70+ shares)

Price as of 8/30/24 Close

Dividend: Monthly at $.1233 per share ($1.48 annually), last raised from $.1225 effective for the January 2024 payment. The September 2014 payment was at $.11 per share. I do not view dividend growth as material. 

STAG Dividend History | Seeking Alpha

Yield at $16.72 AC: 8.85%

Last Ex Dividend: 8/30/24 (sold on the ex dividend date)

Last Earnings Report (Q/E 6/30/24): 

Comparisons are to the 2023 second quarter. 

SEC Filed Press Release 

Revenues: $189.777M, up from $171.694M

Core FFO: $113.147M, up from $103.497M

Core FFO per share:  $.61, up from $.56

Cash Available for Distribution ("CAD"): $95.119M, up from $87.168M 

CAD per share: $.522, up from $.485

The quarterly dividend of $.37 is well covered by CAD. 

Net Income to CAD Reconciliation: 

In the net income to FFO reconciliation, the 2 primary adjustments are to add back the noncash depreciation expense and to subtract the gain from property sales. 

The core FFO to CAD adjustments include deducting the noncash revenue created by the straight line accounting convention, certain capital expenditures and tenant improvements. The major add back is noncash compensation expense.  

Some Other Sell Discussions: Item # 2.A. Pared STAG - Sold 10 at $38.99 (1/23/24 Post)(profit snapshot = $249.22); Item # 4.A. Eliminated Duplicate Position in STAG - Sold 50 at $37.22 (9/16/23 Post)(profit snapshot  = $1,075.13); Item # 1.G. - Sold 4 STAG at $33  (4/1/21 Post)(profit snapshot = $32.49); Item # 7-Pared STAG Sold 42 at $25.2: Update For Equity REIT Basket Strategy As Of 7/28/16 | Seeking Alpha (profit snapshot = $271.32); Item # 2. Pared STAG-Sold 54 Shares at $23.81: Update For Equity REIT Basket Strategy As Of 7/1/16- South Gent | Seeking Alpha (profit snapshot = $318.54); Item # 2. Pared STAG -Sold 50 of 240 at $22.74: Update For Equity REIT Basket Strategy As Of 6/24/16 - South Gent | Seeking Alpha(profit snapshot = $48.31); Update For Equity REIT Basket Strategy As Of 3/21/16 - Item # 2. Sold 133 STAG at $19.61 | Seeking Alpha (profit snapshot = $125.27). 

STAG Realized Gains to Date: $2,554.73

B. Pared WMB - Sold 5 at $45.29:

Quote: Williams Cos (WMB) - Energy Infrastructure

Proceeds: $226.44

WMB SEC Filings

My Video: The importance of funds available for distribution for U S energy infrastructure company stocks - YouTube

Last Discussed: Item # 3.C. Pared WMB - Sold 4 at $40.27 (5/17/24 Post)(profit snapshot = $65.02) 

Last Buy Discussions: Item # 2 Added 95 WMB at $24.98 and 5 at $23.8 (8/20/21 Post); Item # 3.B. Added 5 WMB at $24.2 (10/8/21 Post)

Profit Snapshot: +$106.34 

New Average cost per share: $23.85 (95+ shares)

Price as of Close on 8/29/24

Dividend: Quarterly at $.475 per share ($1.9 annually), last raised from $.4475 effective for the 2024 first quarter payment. 

WMB Dividend History | Nasdaq

Yield at $23.85: 7.97%

Next Ex Dividend: 9/13/24

Last Earnings Report (Q/E 6/30/24): 

SEC Filed Press Release 

Revenue: $2.336B 

GAAP Net Income: $401M or $.33 per share

Adjusted E.P.S. $.43

Funds Available for Distribution: $1.25B or $1.02 per share

Coverage for Dividend Using FAD: 2.65 times 

Noncash depreciation and amortization "expense": $540M

Other Sell Discussions: Item # 1.A. Pared WMB - Sold 10 at $36.12 (1/12/2024 Post)(profit snapshot = $127.61); Item # 6.A. Eliminated WMB Duplicate Positions - Sold 10+ at $35.23; 5 at $35.33 (8/12/23 Post)(profit snapshot = $190.08)

Currently Owned WMB SU Bonds:

6 of the 3.9% Maturing on 1/15/25

2 of the 3.7% Maturing on 6/15/27

The most recent WMB SU note to mature was on 6/24/24. I owned 4 bonds: 

Most Recent WMB Bond Offerings (August 2024): Prospectus 

Fitch Rates Williams Companies Proposed Senior Unsecured Notes 'BBB'

C. Eliminated DCOM - Sold 10 at $25.85: 

Quote: Dime Community Bancshares Inc. (DCOM) 

Proceeds: $258.5

DCOM Analyst Estimates | MarketWatch

DCOM SEC Filings 

10-Q for the Q/E 6/30/24 

Dime Community (DCOM) was previously known as Bridge Bancorp (BDGE). When Bridge acquired Dime Community, it changed its name and symbol. 

Profit Snapshot: $77.44

Last Discussed: Item # 2.A. Restarted DCOM - Bought 10 at 18.11 (6/20/24 Post) 

Last Elimination: Item # 2.A. Eliminated DCOM - Sold 41+ at $27.09 (1/6/24 Post)(profit snapshot = net of +$369.83) I discussed the 2024 first quarter report in that post. SEC Filed Earnings Press Release

Dividend: Quarterly at $.25 per share, last raised from $.24 effective for the 2023 second quarter. The dividend was raised to $.24 from $.23 effective for the 2020 first quarter. The $.23 per share quarterly dividend was in effect starting in 2005. I view this dividend history as highly unfavorable. The only positive is that the dividend was not cut from $.23 in 2008. 

DCOM Stock Dividend History & Date

Last Ex Dividend: 7/17/24

Last Earnings Report (Q/E 6/30/24): 

SEC Filed Earnings Press Release 

Comparisons are to the 2023 second quarter.  

E.P.S.: $.43, down from $.66

NIM: 2.41%, down from 2.5%

Efficiency Ratio: 63.8%, up from 57.6% (up is negative)

NPA Ratio: .18%

Charge off ratio: .14%

Tangible Book Value per share: $24.87, up from $23.82

Owned Securities: 

Interest rate risk management is poor IMO but typical for regional banks who failed to lower duration risk in 2021. 

Other Sell Discussions: The largest annual gain was $2,157.52 realized from two transactions in 2017. Item # 2.A. Sold 109+ BDGE at $35.53 (10/31/17 Post)(profit snapshot = $1,782.46) and Item # 2.A. Sold 50 BDGE at $35.03 (4/23/17 Post (profit snapshot = $376.06).  

Item # 3. Eliminated Duplicate DCOM Position - Sold 5+ at (8/5/23 Post)(profit snapshot = 20.51); Item # 1.H. Sold 10 BDGE at $21.02-highest cost lot (9/5/20 Post); Item # 3.H. Pared BDGE - Sold 5 at $26.72 (1/30/21 Post)(profit snapshot $41.58); Item # 2.D. Pared BDGE-Sold 5 at $23.8 (12/25/20 Post); Item # 1.H. Sold 10 BDGE at $21.02-highest cost lot (9/5/20 Post); Item # 4 Pared BDGE Selling Highest Cost 56 Shares at $24.71 (12/10/13 Post)(profit snapshot = $200.2); Item # 3 Sold 50 BDGE at $23.01 (9/24/12 Post); Item # 3 Sold 50 BDGE at $23.5 (7/3/12 Post); Item # 3.C. Eliminated Duplicate Position in DCOM - Sold 5+ Shares at $21.34 (8/5/23 Post)

Realized Gains DCOM/BDGE: +$3,156.11

D. Pared AIO - Sold 5 at $21.59: 

Quote: Virtus Artificial Intelligence & Technology Opportunities Fund Overview - A Leveraged Balanced CEF 

Proceeds: $107.95

Sponsor's website: Virtus Artificial Intelligence & Technology Opportunities Fund

AIO Portfolio | Morningstar (lists top 25 holdings)

AIO SEC Filings

SEC Filed Annual Report for the period ending 1/31/24 (AIO's list of holdings starts at page 23)

SEC Filings: Holdings as of 4/30/24 (total investment cost at $750.8+M, value at $833.2+M; common stock cost at $325.7+M with value at $415.1+M)

Profit Snapshot: +$26.1

Last Discussed: Item # 2.F. Pared AIO - Sold 8+ at $19.66 (3/15/24 Post) 

Last Buy Discussion: Item # 2.C. Added to AIO - Bought 5 at $15.85; 5 at $15.63; 5 at $15.15 (10/28/23 Post)

New Average cost per share: $15.27

Snapshot Intraday on 9/3/24 after pare

The AC per share was reduced from $15.37. 

Dividend: Monthly at $.15 per share ($1.8 annually)

Yield at New AC = 11.79%

Data Date of 9/3/24 Trade: 

Closing Net Asset Value per share: $21.45

Closing Market Price: $21.23

Discount: -1.03%

Average 3 Year Discount: -9.76%

The decline in the average 3 year discount to 1.03% is for me a consider to pare signal. 

Sourced:  AIO - CEF Connect  (Click Pricing Information Tab)

E. Pared Duplicate Position in ARCC - Sold 1 at $21.1: 

Quote: Ares Capital Corp. - Externally Managed BDC

Proceeds: $21.1

ARCC SEC Filings

SEC Filed 2023 Annual Report (The risk factor summary starts at page 24 and ends at page 50)

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)

Net asset value per share as of 6/30/24: $19.61, 

Profit Snapshot: $8.7

New average cost per share this account: $10.8

Snapshot Intraday on 9/4/24 after pare

The AC was reduced from $10.85. 

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 New AC of $10.8 = 17.78% (regular dividend only

Next Ex Dividend: 9/13/24

ARCC Realized Gains to date: $926.06 

Last Earnings Report (Q/E 6/30/24): I discussed the last earnings report in this post. Item # 2.D. Pared ARCC in Fidelity Account - Sold 4 at $20.95  (8/8/24 Post)(profit snapshot = $33.88); SEC Filed Press Release 

Owned ARCC SU Bonds: 10

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)} 

2. Small Ball Buys: 

I discuss below starting positions in DG and AAP with what I call "placeholder" buys, which focuses my attention on price moves that may generate further buying interest. 

The stocks of both companies are in major bear markets. 

I bought DG on the day the stock declined $39.81 or -32.15%.   

Advance Auto Parts (AAP) has been in a long term bear market after topping near $240 in December 2021. The quarterly dividend was slashed from $1.5 to $.25 in 2023 and the last earnings report missed expectations. 

A. Added 4 PFE at $28.73; 1 at $28.28: 

Quote: Pfizer Inc. (PFE)

Cost: $143.18

Investment Category: Bond Substitute 

PFE | Pfizer Inc. Analyst Estimates | MarketWatch

PFE SEC Filings

Product Revenues: 

The top selling drug is Eliquis whose price was recently slashed as a result of Medicare's price negotiation. Medicare costs lowered for 10 drugs (8/15/24, NBC News){"Eliquis, a blood thinner from Bristol Myers Squibb and Pfizer: $231 negotiated price, down from $521 list price." I also have a position in BMY, held in my Schwab account, adding to it in 1 share lots, with the lowest price in the chain at $39.51, purchased on 7/5/24. I am replacing the duplicate shares sold in two other accounts. Item # 1.A. Eliminated BMY in Fidelty Account - Sold 14 at $74.64 (2/13/23 Post)(profit snapshot = $206.75); Item # 2. Eliminated BMY in Vanguard Taxable Account - Sold 15+ at $77.56 (5/5/22 Post)(profit snapshot = $279.11)}. 

Bond Substitute Category Explained: My bond substitute category is not intended to say anything about the safety of the dividend, but only expresses the goal of the investment. For stocks so categorized, the goal is an annualized return 2% or higher in excess of the dividend yield at my total cost. If the investment works, I anticipate that the dividend will provide most of the total return. 

My primary interest is in harvesting the dividend and then exiting the position with a relatively small percentage profit.  

Long Term Failure to Create Shareholder Value: As previously discussed many times over here, spanning more than a decade now, I have a very unfavorable opinion of Pfizer's management and its growth by acquisition strategy. 

The current market capitalization is far below what Pfizer has paid for acquisitions starting in 1999. 

Some Acquisitions: 

Warner Lambert: $90.2B

Wyeth: $68B

Pharmacia: $60B

Hospira: $17B

Medivation: $14.3B

Biohaven: 11.6B

Array: $11.4B

Arena: $6.7B

Global Blood Therapeutics: $5.4B

Anacor: $5.2B 

King Pharmaceuticals: $3.6B

Trillium: $2.26B

Seagen: $43B

Total: $338.66B

Market Capitalization at $28.73: $163B

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

This chart reflects the failure of the growth through acquisitions strategy that started in 1999: 

Monthly

The price history since 1999 highlights the failure of Pfizer's managers and Board to create shareholder value by their actions. 

Notwithstanding my negative opinions about this company and its stock, the current price may be near a bottom which, if proven true by future events, makes it easier to realize the goal of a stock categorized as a bond substitute.  

Last Discussed: Item # 3.E. Eliminated PFE in Schwab Account - Sold 9 at $29.28 (5/24/24 Post)(profit snapshot = $17.81) 

New average cost per share: $30.87 (36 + shares)

Dividend: Quarterly at $.42 per share ($1.68 annually), last raised from $.41 effective for the   

Pfizer Inc. (PFE) Dividend History | Seeking Alpha

There was a slash from $.32 to $.16 in 2009.  The last stock split was 3 for 1 in 1999. Pfizer Inc. - Investor Relations - Stock Info - Dividend & Split History

Yield at $30.87:  5.44%

Last Ex Dividend: 7/26/24

Last Earnings Report (Q/E 6/30/24): 

SEC Filed Press Release 

Comparisons are to the 2023 second quarter

Revenues: $13.243B, up from $13.007B

GAAP E.P.S. = $.01, down from $.41

Non-GAAP E.P.S. = $.60, down from $.67

There has traditionally between large percentage differences between GAAP and non-GAAP E.P.S. numbers which I view unfavorably when they are persistent over a long period. 

Reconciliation of GAAP to Non-GAAP: 

Other Sell Discussions: Item # 1.E. Eliminated PFE in 2 Accounts: Sold 7 at $41.26 and 3+ at $41.29  (3/6/23 Post)(profit snapshots = $48.92; snapshots of prior realized gains over $100, staring in 2006, can be found in that post); Item # 3.J. Sold PFE Shares Bought with Dividends at $51.714 and at $60.93 (12/16/21 Post); Item # 2.M. Sold 6 at $36.69 (11/28/20 Post)(profit snapshot = $43.6); Item # 4.A. Sold Remaining 33 PFE shares  at $33.44 (8/13/2017 Post)(profit snapshot = $90.67); Item # 3.A. Sold 100 PFE at $34.03 (7/13/17 Post)(profit snapshot = $143.42); Item # 3.A. Sold 100 PFE at $34.65 (3/13/17 Post)(profit snapshot = $235.86); Item # 1 Sold: 100 PFE at $31.68 (5/17/14 Post)(profit snapshot = $282.12) Buy discussions are linked in those posts.

Trading has been required since 1999 to achieve a satisfactory total return. 

PFE Realized Gains to Date: $1,316.21

B. Added to CVE - Bought 5 at $18.45:

Quotes: 

USDs: Cenovus Energy Inc. (CVE)

CADs: Cenovus Energy Inc. (Canada: Toronto)

Canadian Dollar to US Dollar Exchange Rate Chart | Xe

Cost: $92.25

Website: Cenovus Energy is an integrated Canadian oil company

CVE SEC Filings (foreign issuer forms)

CVE Analyst Estimates in USDs - MarketWatch

The price has declined since my initial purchases due to energy prices falling. 

New Average cost per share: $19.17 (20 Shares)

Dividend: Quarterly at C$.18 per share

Next Ex Dividend: 9/13/24

Last Discussed: Item # 3.D. Started CVE in Schwab Account - Bought 10 at $19.7; 5 at $18.84 (8/21/24 Post) I discussed the last earnings report in that post. Cenovus announces second quarter 2024 results and SEC Filed Management Discussion

C. Bought 1 AAP at 46.55; 1 at $45.06; 1 at $43.76; 1 $43; 1 at $42.2:

Quote: Advance Auto Parts Inc (AAP) 

Cost: $220.57

I have not previously had a position in AAP. 

The stock is in a falling knife mode that started in 2021. 

There is no indication yet that the stock has found a bottom which explains the 1 share buys. 

Website: Advance Auto Parts: Car, Engine, Batteries, Brakes, Replacement, Performance & Accessories

10-Q for the Q/E 7/13/24 

AAP SEC Filings 

2023 Annual Report for the F/Y ending 12/30/23 2023 was a disastrous year for AAP. The company reported a GAAP E.P.S. of $.50. 

AAP Analyst Estimates | MarketWatch  As of 9/1/24, the average 2024 E.P.S. estimate was at $3.83; at $4.38 in 2025 and at $4.8 in 2026. 

Store Information as of 7/13/24: 

Sale of Worldpac: The total includes 321 Worldpac stores that is a wholesale distributor of auto parts. On 8/22/24, AAP announced that it was selling this business for $1.5B in cash. Advance Auto Parts, Inc. - Advance Auto Parts Announces Sale of Worldpac to Carlyle for $1.5 Billion AAP expects to receive about $1.2B in net proceeds after taxes and transaction costs. Worldpac had $2.1B in revenues and generated about $100M in EBITDA over the prior 12 months. 

Market Capitalization at $42.42 Closing Price: $2.53B

5 Year Chart: Major Bear Market Starting in January 2022

Gaps in Price Chart: There are two gaps in the five year chart that have not been filled by subsequent price action which is a negative IMO. The first occurred in May 2023 and the second in August 2024. The current price has returned to 2010 levels. 

The break in May 2023 was in response to the first quarter earnings report and updated 2023 guidance. SEC Filed Earnings Press Release E.P.S. guidance was slashed from $10.2-$11.2 to $6-$6.5. As the year progressed, it got worse. The actual 2023 E.P.S. was reported at $.5. SEC Filed Earnings Press Release for the Q/E 12/31/23 

Interest expense in 2023 increased to $88.052M from $51.06M in 2022.  

Recent Bond Offerings (March 2023): Prospectus 

The SU bonds are currently rated at Baa3/BB+. I am monitoring the prices for the 2026 and 2028 maturities which simply means that I have bookmarked the relevant FINRA pages and will occasionally tap on the links to look at the trading history.  

There were no borrowings under a credit facility as of 7/13/24. The long term debt then stood at $1.787+B. 

10-Q at page 10

At a minimum, I will use an Advance Auto Parts store to replace a dead battery which will be installed by one of its employees. I will jump start the car with the Stanley 1200 Peak Amp Automotive Jump Starter, Portable Power – 2.1A/10W USB Port, 120 PSI Air Compressor The store in Franklin, TN is relatively small and is strategically placed to serve south Nashville, Brentwood and the Franklin area. There are five other stores in the Metropolitan Nashville area that are strategically placed to serve north, east and west areas. 

My point is simply that the number of stores (6) are the right number and placed correctly to serve the entire metropolitan area. The main competitors are AutoZone Inc. (AZO) and O'Reilly Automotive Inc. (ORLY) who have a combined 39 stores in the Nashville metropolitan area, so that is a big problem for AAP and highlights the competitive struggle. 

The business strategy for competing with AZO and ORLY can not be to try and out store them.  

The inventory cost of each store is high so there needs to be a fairly quick turnover, at least of the more expensive merchandise like batteries. The inventory turnover in days is longer for AAP compared to AZO and ORLY. Here's Why Advance Auto Parts Crashed in August | The Motley Fool

I see the potential for a turnaround but it is too early to know whether it will in fact happen. I could not discern a business strategy that makes sense to me for competing with those larger auto parts chains.  

Average cost per share: $44.11  (5 shares)

Dividend: Quarterly at $.25, slashed from $1.5 per share effective for the 2023 third quarter payment. 

Advance Auto Parts Inc. (AAP) Dividend History | Nasdaq

Yield at $45.12 = 2.27%

Next Ex Dividend: 10/11/24

Last Earnings Report (Q/E 7/13/24): 

Comparisons are to the fiscal quarter ending on 7/15/23.

Net Inventories: $4.903+B, up from $4.875B

Revenues: $2.683+B, down from $2.686+B

E.P.S. = $.75, down from $1.32

E.P.S. for 28 weeks: $1.42, down from $2.13

Cash and cash equivalent: $479.418M

Free Cash flow: -$4.631M 

2024 Guidance: 

D. Bought 1 DG at $86.69; 1 at $80: 

Quote: Dollar General Corp. (DG) 

Cost: 166.69

Dollar General - Investor Relations

DG SEC Filings 

10-Q for the fiscal quarter ending 8/2/24 

5 Year Chart: Ongoing Major Bear market.  There was a double top formation near $260 per share in April and October 2022. 

On the day of my first purchase, the stock declined by 32%+ in response to a poor earnings report and lowered guidance. I was sufficiently attracted to that decline to buy 1 share. 

The stock continued to fall and slightly accelerated its decline after Dollar Tree reported worst than expected earnings, which I discussed in this comment. I bought 1 more share in response.  

Earnings Report for the F/Q Ending 8/2/24: SEC Filed Earnings Press Release 

E.P.S. $1.7, with the consensus at and down from $2.13 reported in the F/Q ending 8/4/23. 

For the 26 weeks ending on 8/2/24, E.P.S. was reported at $3.35, down from $4.47 for the same period in 2023. 

Revenues: $10.21B

Same store sales increased by .5%

New Fiscal 2024 E.P.S. Guidance: $5.5-$6.2, down from the prior guidance of $6.8 to $7.55. DG reduced net sales growth guidance to 4.7%-5.3% from 6% to 6.7%. 

Ending Store Count: 20,345, up from 19,488. 

Dollar General (DG) shares crater as retailer cuts outlook, blaming 'financially constrained' customers; 

Dollar General Blamed the Economy for Poor Earnings, but This Was the Cause - Barron's The author downplays DG's claim that the decline in earnings was "partially attributable to a core customer who feels financially constrained." 

DG does cater to lower income households who have been negatively impacted by inflation more than other income groups. 

Earnings abruptly declined in 2023. 

While problematic inflation numbers started in 2021, the stimulus payments more than offset for many households the price increases in products sold by DG. 

The negative impact of inflation consequently was delayed until 2023.

Given the reliance on lower income households, the stimulus payments probably helped DG more than most other retailers during 2020-2022 as reflected in the pre-pandemic E.P.S. numbers. 

DG Diluted E.P.S.:   

F/Y Ending 2/2/18: $5.63

F/Y Ending 2/1/19: $5.97

F/Y Ending 1/31/20: $6.64 10-K at page 23 

Start of pandemic: $814B in stimulus checks

Update: Three rounds of stimulus checks. See how many went out and for how much. | Pandemic Oversight

F/Y Ending 1/28/21: $10.62 10-K at page 44 

F/Y ending 1/28/22: $10.17

FY ending 2/3/23: $10.68

FY ending 2/2/24: $7.55, 10-K at page 45

During the period of problematic inflation, consumer products were significantly hiked in price by manufacturers trying to recoup their increased input costs and that led to lower volumes. This was widespread. 

When the stimulus payments ended, the price increases resulting from inflation did not go into reverse but continued to increase, though at a far slower pace than in 2021 to mid-2023.

What were necessities for many households became unnecessary or less frequently used. Is detergent really necessary when washing clothes or shampoo or hair spray, just as examples.  

It is true that DG has an ongoing competitive problem from retailers including WalMart who reported better than expected earnings and revenues in its last quarter. 

And, DG is suffering as are other box retailers what they all euphemistically called "inventory shrinkage" which is a major problem for all retailers.  

A long term positive relates to the decision of Dollar Tree to close 600 Family Dollar stores this year and 370 more over the next several years as leases expire. Family Dollar and Dollar Tree will close 1,000 stores | CNN Business

Average cost per share: $83.34 (2 shares)

Dividend: Quarterly at $.59 per share, last raised from $.55 effective for the 2023 second quarter payment. The quarterly rate was at $.22 in 2015. 

Dollar General - Dividend History

Yield at $83.34: 

Last Ex Dividend:  7/8/24

Website: Dollar General | Save time. Save money. Every day.

Maximum Position: 5 shares

Purchase Restriction: 1 share lots with each subsequent purchase required to be at the lowest price in the chain. 

3. Treasury Bill Purchases: 

Treasury bill yields have continued to trend down in anticipation of imminent FED rate cuts. 

A. Bought  5 Treasury Bills at the 9/3/24 Auction: 

91 Day Bills

Matures on 12/5/24

Interest: $62.82

Investment Rate: 5.103%

B. Bought 5 Treasury Bills at the 9/3/24 Auction - 2 Accounts:

182 Day Bills

Matures on 3/6/25

Interest: $117.42

Investment Rate: 4.823%

C. Bought 5 Treasury Bills at the 9/4/24 Auction: 

119 Day Bill

Matures on 1/7/25

This is my first purchase of a 4 month T Bill that matures in 2025. By holding until maturity, which I always do for T Bill purchases at auctions, the interest income will be taxed in 2025.  

Interest: $79.5

Investment Rate: 4.956%

4. Equity Preferred Stocks: 

A. Bought 5 ATLCP at $23; 5 at $22.5: 

Quote: Atlanticus Holdings Corp. 7.625% Cumulative Preferred Series B  (ATLCP) 

Cost: $227.5

I bought the 5 shares the day before the ex dividend date and 5 shares on the ex dividend date. 

Issuer: Atlanticus Holdings Corp. (ATLC) 

ATLC SEC Filings 

10-Q for the Q/E 6/30/24 at page 6  ATLC is "primarily focused on facilitating consumer credit through the use of our financial technology and related services. Through our subsidiaries, we provide technology and other support services to lenders who offer an array of financial products and services to consumers who may have been declined by other providers of credit. We are principally engaged in providing these products and services to lenders in the U.S. and, in most cases, we invest in the receivables originated by lenders who utilize our technology platform and other related services."  

Participation in those consumer loans creates a heightened level of risk IMO.  

ATLC Analyst Estimates | MarketWatch

Our Company 

Products 

I view this equity preferred stock as high risk which is confirmed by its current yield IMO. 

Original Prospectus 

ATLC has an ongoing ATM program for this preferred stock and its 9.25% senior unsecured exchange traded bond. Prospectus 

Par Value: $25

Coupon: 7.625% 

Average cost per share: $22.75

Yield at $23: 8.38%

Dividends: Paid quarterly and cumulative

Last Ex Dividend: 8/30/24

Maturity: None

Optional Call: On or after 6/11/26

Stopper Clause: Yes, see page S-18 of the Prospectus 

No cash dividend is currently being paid, so the stopper clause would not prevent a deferral of the preferred share dividend unless cash was used to buy back common stock. 

The absence of a cash common share dividend and no expectation from common shareholders that one will be declared soon create an enhanced risk for a preferred stock owner. 

If there was a cash common share dividend and an expectation that one would be paid, a company would be more hesitant to eliminate the cash dividend altogether, which would then legally allow the deferral of a cumulative preferred dividend. 

The elimination of the cash common dividend could still happen, but a more likely alternative, unless the the company is in dire financial condition, would be to slash it, possibly down to 1 cent per quarter. Even at a 1 cent per share cash quarterly dividend, the quarterly preferred dividend would have to be paid in full. The Stopper Clause enforces the preferred shareholders superior claim to cash compared only to the common shareholders. 

B. Bought 10 MNSBP at $22.95: 

Quote MainStreet Bancshares Inc. 7.5% Preferred Stock Series A (MNSBP) 

Cost: $229.50

Issuer: MainStreet Bancshares Inc. -  A Bank Holding Company

The market capitalization is near $130M at the current price. 

The operating bank has 5 branches located in northern Virginia and 1 in D.C. (see Map at page 3) 

The downside risk of a preferred stock issued by a bank holding company is a zero price (or a few cents above zero), which will likely be realized when and if the FDIC seizes the operating subsidiary. The debt owed by the bank holding company will generally far exceed the value of any remaining assets.  

MNSB Analyst Estimates | MarketWatch

MNSB SEC Filings 

SEC Filed Investor Presentation 2024 2nd Q 

SEC Filed Earnings Press Release for the Q/E 6/30/24 Due to an increase in nonperforming loans and a contraction in the net interest margin, earnings declined significantly year-over-year: 

The bank blamed the increase in nonperforming loans to two commercial relationships. 

"Total deposits reached $1.8 billion in the second quarter, an increase of 10.2% from the second quarter of 2023. Loan growth is up 8.6% over the same period, also reaching $1.8 billion." 

MNSB is currently paying a common share dividend. MainStreet Bancshares, Inc. Common Stock (MNSB) Dividend History | Nasdaq To eliminate the noncumulative preferred stock dividend, the company must first eliminate the cash dividend paid on the common stock. 

MNSBP Prospectus

Par value: $25

Coupon: 7.5%

Yield at $22.95: 8.17%

Next Ex Dividend: 9/16/25

Dividends: Paid quarterly, qualified and non-cumulative 

Optional Call: On or after 9/30/25

Maturity: None

Stopper Clause: Yes, standard. 

I did eliminate in a Roth IRA account last Wednesday all of my bank holding company preferred stocks (10 altogether) as a risk reduction move. I still own the same preferred stocks in taxable accounts. 

5. Exchange Traded Bonds: 

Investment Category: Exchange Traded Baby Bond

A. Bought 5 ATLCZ at $25.3: 

Quote: Atlanticus Holdings Corp. 9.25% Senior Notes due 2029 (ATLCZ) 

Cost: $126.5

Issuer:  Atlanticus Holdings Corp. (see Item # 4.A above)

Investment Category: Exchange Traded Baby Bonds

Senior Unsecured Note

Coupon: 9.25%

The notes were originally offered in January 2024.

Par Value: $25

Prospectus 

Yield at $25.3: 9.14%

The yield highlights the elevated risk. 

Maturity Date: 1/31/29

Optional Call Information: 

The make whole payment that is required for redemptions prior to 1/31/25 is described at page S-14 of the prospectus. 

Interest Payments: Quarterly

Last Ex Interest Date: 7/21/24

Trades flat

B. Added 10 EMP at $22.76 - Vanguard Taxable Account: 

Quote: Entergy Mississippi LLC 4.9% First Mortgage Bonds Overview

Cost: $227.6 

Last Discussed: Item # 4.A. Added to EMP in Schwab Account - Bought 5 at $22.48 (8/8/24 Post) 

As with other FM exchange traded bonds, I will own up to 300 shares in taxable accounts and a few more in Roth IRA accounts.  

Prospectus

Par Value: $25

Security: First Lien on substantially all assets 

Coupon: 4.9% paid on the $25 par value

Interest: Paid quarterly

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

Maturity: 10/1/2066 unless called at par value earlier at the issuer's option. 

Interest Rate Risk: Asymmetric in favor of the issuer. 

New average cost per share this account: $23.09 (60 shares)

Yield at $23.09: 5.305%

Next Ex Interest: 9/30/24 

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)

6. Tennessee Municipal Bonds:

A. Bought 5 Murfreesboro 3% GO at a Total Cost of 98.4: 

Emma Page 

When this bond was originally offered in 2021, the offering price was 117.121 which created a .85% yield. 

Credit Ratings: Aa1/AA+

Matures on 6/1/2031

Call Schedule: 

Federally Tax Exempt Interest

YTM at Total Cost: 3.266%

Current Yield at TC = 3.049%

B. Bought 5 Knoxville Tennessee Electric System 3% Revenue Bonds Maturing on 7/1/2030 at a Total Cost of 98.7: 

Emma Page

Credit Ratings: Aa2/AA-

Interest: Paid semiannually and federally tax free

YTM at TC: 3.246%

Current Yield at TC =  3.04%

Optional Call: On or after 7/1/25

Rate Covenant: 

Offering Statement at page 10.pdf 

Tennessee is a public power state. 

The only power supplier for the Knoxville Electric System is TVA which is wholly owned by the U.S. government.  

Distribution systems are owned either by rural electric cooperatives or municipal electric systems. 

For electric revenue bonds issue by Knoxville Electric system,  the bonds are secured by the revenues generated by the electric system and are not obligations of the municipal government. 

Electric System as of 6/30/23: 218,344 customers (Annual Disclosure Document.pdf) 

The Knoxville electric, water and wastewater systems are managed by the Knoxville Utility Board and are owned by the City.  

Water revenue bonds are generally "safer" than electric revenue bonds since water is cheaper and consequently more likely to be paid on time and in full. Operating costs of electric systems will generally be higher longer term. 

S&P has a AAA rating on the Knoxville Water Revenue bonds. I own several. 

I own a few water revenue bonds issue by other Tennessee municipalities as well that have AAA ratings. I would view them as more secure and safer than U.S. treasuries. 

7. Corporate Bonds: 

A. Bought 2 Main Street Capital 3% SU Maturing on 7/14/26 at a Total Cost of 95.743: 

Issuer: Main Street Capital Corp. (MAIN) - Internally Managed BDC

MAIN SEC Filings 

SEC Filed Earnings Press Release for the Q/E 6/30/24 

10-Q for the Q/E 6/30/24 The debt is listed at page 91. As of 6/30/24, there were no borrowings under the credit facility.  

SEC Filed Investor Presentation for the 2024 2nd Q 

Finra Page: Bond Page | FINRA.org

Credit Rating: BBB-

As previously discussed here many times, senior unsecured debt issued by a BDC has unique risks that include paying out almost all net investment income as dividends to common shareholders and making loans to risky borrowers. The better managed ones will generally have a credit rating one notch above junk, but the YTM will be higher than most other BBB-/Baa3 rated bonds from non-pass through entities, indicating that bond investors would rate the bonds one notch lower in the credit rating scale.   

YTM at Total Cost: 5.434%

Current Yield at TC: 3.13%

I now own 4 bonds. 

MAIN had a 5.2% $400M SU note mature in May 2024. 

I owned 4: 

On the date of purchase of the 2026 note, the two year treasury note closed at a 3.88% yield.  

Recent Bond Offerings: 

In May 2024, MAIN sold $300M of a 6.5% SU note maturing in 2027. Prospectus 

In January 2024, MAIN sold $350M of a 6.95% SU note maturing in 2029. Prospectus 

So refinancing costs have gone up compared to pre-2022 offerings but have started to trend back down and have been lower this year than many other BDCs. 

8. Cash Flow into Fidelity Taxable Account - 9/3/24: 

The focus is not on capital appreciation but in creating a constant flow of interest income. 

Dividends paid by CEFs, common and preferred stocks are view as supplemental sources of income. 

The bond ladder is constructed with multiple maturities each week extending through June 2025 and then less frequent and more sporadic starting in July 2025.      

Redemption Proceeds: $15,000

Dividends and Interest Payments: $1,233.16

Corporate Bond Interest ($1,000 par value) = $439.36

In other taxable accounts, I received $12,000 from corporate bonds that matured on 9/1/24.

Exchange Traded Bond Interest ($25 par values): $56.88 (EAI and ELC first mortgage bonds, SAZ, GLDZ)

Tennessee Municipal Bond Interest: $615.63 (federally tax free)

Treasury Note Interest: $32.5

Treasury Bills: None matured on 9/1/24.  

CD Interest: $30.75 (all pay monthly)

Common Stock Dividends: $17.67

CEF Dividends: $40.37 (all pay monthly)

The portfolio allocation rule that I follow is that all dividend and interest income will be used to purchase common stocks when there is at least a 30% decline from a recent high in the S&P 500. The redirection will occur within 7 days of receipt. 

Proceeds from maturing fixed income securities will be used in moderation to supplement the stock buying as the stocks decline further. 

I followed this plan starting September 2008 and then started to supplement the purchases by selling corporate bonds in February 2009 and delving into my money market funds for additional cash. By June 2009, I had returned the portfolio value to the October 2007 high.

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.