Economy:
In the first estimate of third quarter GDP growth, the government reported yesterday that real GDP growth in the third quarter increased by 2.8%. Gross Domestic Product, Third Quarter 2024 (Advance Estimate) | U.S. Bureau of Economic Analysis (BEA)
Personal consumption expenditures were reported at +3.7%:
In the monthly "Personal Income and Outlays" report for September, the government reported that PCE inflation rose 2.1% over the 12 month period ending in September, down from 2.3% through August. The month-to-month increase was .2%, up from .1% in the July to August time period. Real personal consumption expenditures increased by .4%, up from .2% in the prior month. Personal Income and Outlays, September 2024 | U.S. Bureau of Economic Analysis (BEA)
ADP reported that the private sector added 233,000 in October. Annual pay increased by 4.6% over the 12 months ending in October. ADP National Employment Report: Private Sector Employment Increased by 233,000 Jobs in October; Annual Pay was Up 4.6%; discussed at Private job creation totaled a stunning 233,000 in October, far more than expected, ADP says
S&P Corelogic Case-Shiller National Home Price Index Records 4.2% Annual Gain in August 2024
Republicans claim that the U.S. is a failing nation, part of their increasing dark Orwellian created alternate reality that only the Chosen One can correct and Make America Great Again.
Companies ready price hikes to offset Trump’s global tariff plans - The Washington Post Trump's proposals to increase tariffs will contribute to higher inflation.
Pending Home Sales Advanced 7.4% in September The annual increase was at 2.6%.
My Video: Good Economic News Released Today October 30th - YouTube
Treasury Yield Curve October 2024: Intermediate and long term rates continue to move higher.
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Allocation Shifts Discussed in this Post:
Treasury Bills: $12,000 in principal amount
Corporate Bonds: $24,000 in principal amount
Treasury Notes Secondary Market: $2,000 in principal amount
Outflow Common Stocks: -$1,631.63
(Consisting of $2,416.14 in proceeds minus $784.51 in purchases)
Outflow Stock Funds: -$244.19
Net Outflow Stocks/Stock Funds: -$1,875.82
Outflow Equity Preferred Stock: -$995.98
2024 Net Outflow Stocks/Stock Funds: -$50,143.03 (discussed in posts)
The actual 2024 net outflow would be a few thousand dollars higher since I do not discuss every trade in this blog.
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Trump and His Party:
President: general election : 2024 Polls | FiveThirtyEight
Day of Love - YouTube In TrumpWorld, the January 6th republican assault on the nation's capital by "patriots" was just a "day of love".
Donald Trump Takes Lead in National Polling Average vs Harris for First Time - Newsweek (10/28/24)
Trump Wants You to Accept All of This as Normal - The Atlantic Anne Applebaum notes that the Trump rally at MSG indicates that the republicans are "psychologically preparing Americans for an assault on the electoral system, a second January 6, if Trump doesn’t win—or else an assault on the political system and the rule of law if he does."
Tucker Carlson made this thoroughly repulsive comment at this rally: "It’s going to be pretty hard to look at us and say, ‘You know what? Kamala Harris, she got 85 million votes because she’s so impressive as the first Samoan Malaysian, low-I.Q., former California prosecutor ever to be elected president." What Carlson and others were saying is that there is no way that Harris could legitimately win, no matter what the states say in the certified election results. Other speakers echoed Carlson's racism and assault on the democratic process.
Trump unveils the most extreme closing argument in modern presidential history
Fact check: Debunking 16 false claims Trump made at Madison Square Garden
‘Pure Fascism’: Authoritarianism Expert Breaks Down Trump’s Madison Square Garden Rally
Trump's rhetoric is fact free, fascist and demagogic and enthusiastically applauded by republicans, which needs to be remembered for as long as you live irrespective of whether Trump wins or loses.
George F. Will on Trump’s ‘cultish’ potential staffers - YouTube
Fact check: How Trump’s TV ads deceive viewers with misleadingly edited quotes Those are just extensions of his false and misleading statements that are measured in the tens of thousands.
Trump says he'll fire Jack Smith 'within 2 seconds' if he's elected - ABC News
Trump: "We got immunity at the Supreme Court. It's so easy. I would fire him within two seconds. He'll be one of the first things addressed."
My Video: If Trump is elected, he will fire the prosecutor bringing criminal charges against him - YouTube
If Trump fires Jack Smith, and the Democrats are in control of the House, Trump will be impeached for the third time. I would anticipate that the House Judiciary Committee would hold hearings to build a record that Trump was guilty of committing federal crimes and the firing of the special prosecutor was consequently an obstruction of justice. Of course, it would be a party line vote in the House and would go nowhere in the Senate again.
Trump's reference to "immunity" in the quoted sentence above is telling. He is probably correct that the Republican Justices have provided Trump with a very broad immunity to commit crimes during his second term. (My Video: Republican Justices Greenlight the President to Commit Crimes - YouTube)
Trump: ‘I Need the Kind of Generals That Hitler Had’ - The Atlantic For Trump the generals must have personal loyalty to him
Trump tells Joe Rogan the ’enemy from within’ is worse than Kim Jong Un - The Washington Post Trump is talking about those who do not view him as a Messiah. Fact check: 32 false claims Trump made to Joe Rogan | CNN Politics
Trump Praises Chinese President For Controlling Citizens 'With An Iron Fist'
Trump’s Depravity Will Not Cost Him This Election - The Atlantic The author is correct in noting that mainstream media outlets are sane-washing Trump's crazy comments. I have noticed that even the New York Times is sane-washing Trump which is irritating some subscribers.
Trump's obvious depravity as a human being will not influence enough voters IMO to change the outcome. Those who view him as mentally unbalanced and a morally repugnant person were not going to vote for him in 2024 and did not vote for him in 2020.
The vast majority of Trump voters are far too deep in the cult psychology to ever see Trump for who he is.
Stacey Williams goes public with her allegations against Donald Trump
How Trump talks: Abrupt shifts, profane insults, confusing sentences - The Washington Post
Yes, Trump said he’d use the military against Americans he called ‘the enemy from within’ - YouTube
Racist, vulgar rhetoric takes center stage at Trump's MSG rally - YouTube
Fox News edited Trump’s rambling answers and false claims in barbershop interview, full video shows Fox can be expected to sane-wash Trump but I did not expect the New York Times to do it.
A GOP operative accused a monastery of voter fraud. Nuns fought back. - The Washington Post The operative is Cliff Maloney who falsely asserted that no one lived at the monastery and that the voters registered at that address were illegal voters. He included the names, addresses, ages, and political affiliations in his X message, the primary distributor of Fake News in the U.S. Nuns had been residing at the monastery since 1970 and their names were listed on Benedictine Sisters of Erie’s website which Maloney could have checked before making his false claims. GOP Canvasser Falsely Accuses Pennsylvania Nuns of Voter Fraud - Peter Gattuso - The Dispatch Maloney claims that he received that erroneous information from a third person.
The monastery was occupied by nuns who were permanent residents, with many having lived there for decades.
Maloney's claim was viewed by more that 2 million people on "X". When contacted by the WP, and was told that nuns lived at the monastery, Maloney made this comment: "If we confirm that, great, I encourage them to vote. If we don’t confirm that, we’ll look at the next step to take to make sure that only legal votes are cast." Pennsylvanian Nuns Deny Voter Fraud Allegations Made on Social Media | National Review; 'Really disgusting': GOP slammed by order of nuns accused of election fraud
My video: Republicans Accuse Nuns of Voter Fraud - YouTube
Jeff Bezos killed Washington Post endorsement of Kamala Harris
My video: Bezos, William Lewis and the Foxification of American Journalism - YouTube
Jen Rubin: What Really Happened At The Washington Post - YouTube
The new owner of the Los Angeles Times, the billionaire Patrick Soon-Shiong, blocked the paper from endorsing Harris. The editorial editor resigned in protest. Los Angeles Times editorials editor resigns after owner blocks presidential endorsement - Columbia Journalism Review
My Video: Bezos, William Lewis and the Foxification of American Journalism - YouTube
Trump continues to threaten retribution against those who have criticized him. Trump’s final pitch to voters: retribution vows, vulgar rallies, fascist accusations; Trump issues threats to prosecute political rivals : NPR; Some billionaires, CEOs hedge bets as Trump vows retribution - The Washington Post
Washington Post editor-at-large resigns over Bezos' decision. He explains why - YouTube, 'Democracy Dies in Darkness': Sabato torches Washington Post for not endorsing a candidate - YouTube
Washington Post Sheds 250,000 Subscribers After Non-Endorsement Decision
Did 'L.A. Times' and NBC pull punches to appease Trump? : NPR I would say yes for all of the owners who interfered in editorial decisions.
Trump threatens media with darker days if he wins the election : NPR
My video: Trump's Threats on the Media are Working for Him - YouTube
USA Today and its 200-plus local affiliates punt on presidential endorsement - POLITICO
REACTION: Confused Trump Rambles Through Rogan Interview. Most EMBARRASSING Moments - YouTube
Trump Said He Took Supplies To Georgia. There’s No Evidence He Did
Mark Cuban on why he dumped Trump to back Harris - YouTube
Comedian Tony Hinchcliffe Performs Wildly Racist Set At Trump Rally In New York City
Trump Attacks The Atlantic's Jeffrey Goldberg Over Hitler - The Atlantic
'Patriot': JD Vance Praises Trump Supporter Who Allegedly Called Election Worker A 'D**khead' and to "suck her c**t" Republicans are upset that the law provides that political merchandise can not be worn within 100 feet of a voting location, something that is well known.
Another Vance Patriot wearing a Trump hat floored an elderly election work who attempted to enforce the law. Man In MAGA Hat Arrested For Allegedly Punching Election Worker
The Trump world’s assault on the people who administer U.S. elections
Unfortunately, the only way to have a peaceful transfer of power after this election is for Harris to lose.
Former Republican candidate charged with stealing Madison County election ballots - YouTube (10/30/24)
Machete-wielding Donald Trump supporter menaces Democrat voters at Neptune Beach polling place
He’s lying’: Bernie Moreno (R), Ohio Senate candidate blames staffers and family for errors Moreno claimed to have a MBA from the University of Michigan, which was a false representation that Moreno made on signed legal documents. When the false statement was pointed out to him, he claimed that a staffer had made a mistake. Ohio US Senate candidate Bernie Moreno doesn't hold an MBA, but bio and application claimed he does • Ohio Capital Journal
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Elon Musk, enemy of ‘open borders,’ launched his career working illegally - The Washington Post Musk denied that he was working illegally but did not supply proof contradicting the information contained in the Post article.
Musk says Trump will cut $2 trillion from the budget, but no one identifies what programs will be eliminated or slashed to meet that goal other than Trump's proposal to eliminate the Department of Education. If Trump and Musk identified those programs, Trump would lose in a landslide. Opinion: If Musk and Trump want to cut federal spending by $2 trillion, they’ll have to come for Social Security and Medicare - MarketWatch; Opinion: Kaboom! Elon Musk predicts ‘hardship,’ economic turmoil and a stock market crash if Trump wins. - MarketWatch (subscription publication).
I have had it with Elon Musk.
If I was on "X", and I am not, I would delete my account. I will quit going to "X" messages which avoids being included in the visitor count.
I would never buy a Tesla now.
I have decided to boycott any company that advertises on "X". Musk has filed a lawsuit claiming that advertisers are conspiring to boycott "X". Musk’s X accuses advertisers of boycotting platform in new lawsuit | Reuters Musk filed the lawsuit in a Texas district court known to be favorable to far right causes.
X’s relationship with advertisers has never been more complex (10/28/24); Elon Musk's X at risk of advertiser exodus as trust dwindles, survey shows - CBS News (9/5/24); Advertisers plan to withdraw from X in record numbers | CNN Business (9/5/24).
The major companies still advertising on X despite Elon Musk’s antisemitic endorsement (11/22/23). While the list may not be current, some of the companies who are advertising on X include the Washington Post, New York Times, Wendy's, WalMart and Mondelez International. I will monitor for similar stories and will boycott any company identified as an X advertiser.
I will avoid going to Wendy's.
I previously canceled my subscriptions to the WP in response to Bezos interfering in the paper's editorials.
I previously mentioned here that I canceled my NYT subscription.
I also also cancelled my Barron's and Wall Street Journal subscriptions last week since I do not view either publication as worth the price and I am not going to pay for the far right propaganda and editorials that appear in the WSJ. I have kept my subscription to Marketwatch that does provide some useful information that is not available from free sources.
I will not buy anything from WalMart or any product made by Mondelez (MDLZ).
I will sell my small ball stock position in MDLZ later today. I will not own stock in any company that advertises on X.
+++
Putin and His Country:
Losses ∙ Russia ∙ WarSpotting — documented material losses in Russo-Ukrainian war
NASA chief calls for alleged talks between Musk, Putin to be investigated
Distillery Tank Toss After Ukrainian Drone Strike on Ethanol Distillery in Voronezh - YouTube
HIMARS Destroys Rare R-934B Sinitsa Jammer and Possible SAM System with - YouTube
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1. Corporate Bonds:
The following purchases were made through last Friday, 10/25.
I use a bond ladder approach and am currently buying investment grade bonds that mature in the 8/1/25 to 12/31/26 time frame.
A. Bought 2 WP Carey 4.25% SU Maturing on 10/1/2026 at a Total Cost of 99.392:
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Issuer: W. P. Carey Inc. (WPC) - Primarily an Industrial REIT
I own the common stock.
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa1/BBB+
YTM at Total Cost: 4.578%
Current Yield at TC: 4.276%
I now own 4 bonds.
I own 10 WP Carey 4% SU bonds that mature 2/1/25, of which 2 are owned in a RI account.
B. Bought 2 American Express 3.95% SU Bonds Maturing on 8/1/25 at a Total Cost of 99.645:
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Issuer: American Express Co. (AXP)
AXP Analyst Estimates | MarketWatch
SEC Filed Earnings Press Release for the Q/E 9/30/24 (Net income of $2.507B)
Finra Page: Bond Page | FINRA.org
Credit Ratings: A2/BBB+
YTM at Total Cost: 4.412%
Current Yield at TC = 3.964%
I have 2 American Express bonds that mature on 12/5/24, so this purchase is kicking the can down the road.
C. Bought 2 Lowes 4.4% SU Maturing on 9/8/25 at a Total Cost of 99.962:
LOW Analyst Estimates | MarketWatch
SEC Filed Earnings Press Release for the Q/E 8/2/24 (net income of $2.383B)
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa1/BBB+
YTM at Total Cost: 4.439%
Current Yield at TC = 4.402%
This is a different Lowe's bond than the one I discussed buying in a recent post. Item # 4.D. Bought 2 Lowe's 3,375% SU Maturing on 9/15/25 at a Total Cost of 99.05 (10/16/24 Post)
D. Bought 1 Union Pacific 3.25% SU Maturing on 8/15/25 at a Total Cost of 99.1:
%203.25%25%208:15:25%20.png)
Issuer Union Pacific Corp. (UNP) - Railroad
I do not have a position in the common stock.
UNP Analyst Estimates | MarketWatch
SEC Filed Earnings Press Release for the Q/E 9/30/24
Finra Page: Bond Page | FINRA.org
Credit Ratings: A3/A-
YTM at Total Cost: 4.379%
Current Yield at TC: 3.28%
E. Bought 2 Southern Gas 3.875% SU Maturing on 11/15/25 at a Total Cost of 99.28:
Issuer: The bond was originally issued by AGL that was acquired by Southern Co. (SO), a large utility holding company, in 2016. Southern Company and AGL Resources complete merger, create a leading U.S. energy company Southern also owns large electric utilities operating in the southeastern U.S.
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa1/A-
YTM at Total Cost: 4.574%
Current Yield at TC = 3.903%
F. Bought 2 Dollar General 4.15% SU Bonds Maturing on 11/1/25 at a Total Cost of 99.45:
%204.15%25%2011:1:25.png)
Issuer: Dollar General Corp. (DG)
I own 2 shares of the common stock, Item # 2.D. Bought 1 DG at $86.89; 1 at $80 (9/5/24 Post)
SEC Filed Earnings Press Release for the F/Q ending 8/2/24; Dollar General (DG) shares crater as retailer cuts outlook, blaming 'financially constrained' customers
10-Q for the fiscal quarter ending 8/2/24
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa2/BBB
YTM at Total Cost: 4.705%
Current Yield at TC = 4.173%
I had two DG 4.25% SU bonds mature on 9/24/24:
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G. Bought 2 Constellation Brands 4.4% SU Maturing on 11/15/25 at a Total Cost of 99.742:
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa3/BBB
YTM at Total Cost: 4.649%
Current Yield at TC = 4.41%
H. Bought 2 Capital One 4.2% SU Maturing on 10/29/25 at a Total Cost of 99.431:
%204.2%25%2010:29:25.png)
Issuer: Capital One Financial Corp. (COF)
COF Analyst Estimates | MarketWatch
FINRA Page: Bond Page | FINRA.org
Credit Ratings:
Fitch Affirms Capital One at 'A-'/'F1'; Outlook Stable (10/10/24)
YTM at Total Cost: 4.779%
Current Yield at TC: 4.224%
I now own 6 bonds.
I had 2 Capital One SU bonds that were redeemed on 10/1/24 that would have matured on 10/31/24.
I have 2 Capital One SU bonds that will mature on 2/25/25.
Last Bond Offering (7/24): Prospectus
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%201:15:26%204.125%25%20.png)
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Issuer: Westlake Corp. (WLK)
WLK Analyst Estimates | MarketWatch
SEC Filed Earnings Press Release for the Q/E 6/30/24
WLK 10-Q for the Q/E 6/30/24 Long term debt is listed at page 11.
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa2/BBB+
YTM at Total Cost: 4.629%
Current Yield at TC = 3.665%
M. Bought 2 Alexandria REIT 4.3% SU Maturing on 1/15/26 at a Total Cost of 99.6:
Issuer: Alexandria Real Estate Equities Inc. (ARE)
ARE SEC Filed 3rd Q 2024 Earnings Presentation (revenues of $791.6M, GAAP net income of $164.7M; FFO at $407.9M)
Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa1/BBB+
YTM at Total Cost: 4.638%
Current Yield at TC = 4.317%
N. Bought 1 Bank of New York 3% SU Maturing on 2/24/25 at a Total Cost of 99.542:
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Issuer: Bank of New York Mellon Corp. (BK)
BK Analyst Estimates | MarketWatch
SEC Filed Earnings Press Release for the Q/E 9/30/24
Credit Ratings: A1/A
YTM at Total Cost: 4.418%
This may work a tiny bit provided the FED cuts the FF rate on 11/7/24 that would reduce the Fidelity MM fund to about 4.25% within 30-40 days. I am not concerned about the credit risk.
2. Small Ball Sells:
I am taking some small losses where I sell shares with unrealized losses that lower my average cost per share into profit territory, raises my dividend yield, reduces my dollar exposure and offsets some of the gains that I am taking in the 4th quarter.
I am also paring dividend stocks by profitably selling my highest cost lots.
Realized Profits this Section: $520.27
Realized Loss this Section: -$65.68
Net Profit this Section: +$454.69
A. Pared OFS - Sold 9 at $8.14:
Quote: OFS Capital Corp (OFS) - Externally Managed BDC
Proceeds: $73.25
Market Capitalization at $8.14: About $109M rounded.
2023 Annual Report (Risk factor summary starts at page 28 and ends at page 63)
Last Discussed: Item # 2.A. Eliminated Duplicate Position in OFS - Sold 59+ at $9.56 and Item #2.B. Pared OFS in Fidelity Account - Sold 9+ at $9.55 (5/10/24 Post)(profit snapshots = $335.97). As noted there, I decided to eliminate this duplicate position based on an acceleration of non-performing loans and the erratic valuation marks for an equity position in a private company that represented 42.5% of net assets as of 3/31/24.
Last Buy Discussions: Item # 3.F. Bought 40 OFS with an Average Cost Per share of $4.18 (11/7/20 Post); Item # 2.L. Added 5 OFS at $3.97-Fidelity Taxable (11/28/20 Post); Item # 1.K. Added 3 OFS at $4.5 -Fidelity Taxable (8/8/20 Post); Item # 3.E. Added 5 OFS at $9.66; 5 at $9.2; 5 at $8.7; 5 at $6; 5 at $5.65; 2 at $3.7; 10 at $3.79 (4/11/20 Post)
Profit Snapshot: $35.16
New Average cost per share: $3.66
 |
| Snapshot Intraday on 10/23/24 after pare |
Dividend: Quarterly at $.34 per share ($1.36 annually), last raised from $.33 effective for the 2023 third quarter payment.
OFS Stock Dividend History & Date
Yield at $3.66 AC = 37.16% That has a wow factor, at least for as long it lasts.
Last Ex Dividend: 9/20/24
Net Asset Value Per Share History:
6/30/24: $11.51
3/31/24: $11.08
12/31/23: $12.09
9/30/23: $12.74
6/30/23: $12.94
12/31/22: $13.47
6/30/22: $14.57 10/Q for the Q/E 6/30/22 at page 3
03/31/21: $11.96 10-Q at page 3
12/21/20: $11.85 10-K at page 69
6/30/20: $10.10
3/31/20: $ 9.71
12/31/19: $12.46
9/30/19: $12.74
6/30/19: $12.95 Page 2 10-Q
3/31/19 $13.04 10-Q
12/31/18 $13.10
6/30/18 $13.70
03/31/18 $13.67
12/31/17 $14.12
12/31/16 $14.82
12/31/15 $14.76
12/31/14 $14.24
12/31/13 $14.54
IPO Offering Price at $15 (November 2012) with proceeds after the underwriters' discount at $13.05 Final Prospectus Supplement
In the 2024 first quarter, OFS marked down its equity investment in this private company to $63.077M. 10-Q at page 15 The percentage of net assets was then at 42.5%.
OFS marked this investment up to $70.831M as of 6/30/24, representing 45.9% of net assets. This markup was $7.754M or $.579 per share and exceeded the$.43 increase in net asset value per share claimed compared to the second quarter.
As previously discussed, OFS owns 400 shares in the private company Pfanstiehl. That investment was valued at $70.927M as of 12/31/23.
That equity investment was valued at $77.105M as of 9/30/23, page 16, with an amortized cost of $217,000.
Looking at the 2019 OFS Annual Report, I noted that the 400 common shares was valued at $4.755M as of 12/31/2019. OFS then had outstanding a 10.5% subordinated loan of $3.768M outstanding. That loan matured in 2021 leaving OFS with just the equity position. (p. 96, 10-K) Frequently equity positions will be acquired by a BDC as part of a loan transaction.
Last Earnings Report (Q/E 6/30/24): SEC Filed Press Release The third quarter report is scheduled for release after the market closes today.
Net Investment Income (NII) per share: $.26, well below the quarterly dividend of $.34 per share and down from $.42 in the 2024 first quarter and the $.38 reported in the 2023 second quarter.
OFS had a realized loss of $4.3M during the quarter. Generally, before a BDC recognizes a loss, the value of the investment would have been written down below amortized cost, and the lower valuation mark would be reflected in the net asset value per share reported prior to actually realizing the loss.
BDC realized gains and losses are not included in the NII number. NII was reported at +$3.437M.
Based on "fair value", 92% of the loan portfolio was in floating rate loans.
OFS estimate of how interest rate changes impact net investment income:
Sourced: OFS 10-Q for the Q/E 6/30/24 at page 63
OFS assessment of loan portfolio credit risks: |
| Pages 53-54 10-Q |
Nonaccrual Loans Breakdown:
 |
| Page 54 10-Q |
The nonaccrual loans still on the books as of 6/30/24 had an amortized cost of $41.276M or 11.12% of the total loan portfolio at amortized cost. The total amortized cost of the non-affiliated loan portfolio was reported at $366.391M and at $371.071M after adding a 4.78M subordinated loan to an affiliated company that had been marked down to $320K, page 15 10-Q.
I am just emphasizing the risk in the preceding discussion and why I tread carefully in his niche income sector. I will harvest gains while I still have them available to harvest.
Some Other Sell Discussions: Item # 1.D. Pared Duplicate Position in OFS - Sold 22 at $10.04(4/5/24 Post)(profit snapshot = $13.7); Item # 3.G. Pared OFS in Schwab Account - Sold 10 at $12.02 (1/26/24 Post)(profit snapshot = $21.59); Item # 3.D. Pared OFS in my Fidelity Account - Sold 8+ at $11.81 (1/20/24 Post)(profit snapshot - $60.72); Item # 1.B. Pared OFS in Schwab Account - Sold 20 at $11.51 (12/30/23 Post)(profit snapshot = $17.65); Item # 6.C. Pared OFS in Schwab Account - Sold 20 at $10.86 (9/30/23 Post)(profit snapshot = $28.94); Item # 3.A. Eliminated OFS in Vanguard Account - Sold 20 at $10.2 and Item # 3.B. Pared OFS in my Fidelity Account-Sold 10 at $10.15 (8/19/23 Post)(profit snapshots = $182.5)(Item #3.B. also contains snapshots of prior realized gains); Item # 3.D. Pared OFS in Fidelity Account - Sold 13.82 Shares at $11.32 (8/16/22 Post); Item # 4.B. Pared OFS in Fidelity Account - Sold 15.427 at $12.49 (6/15/22 Post)(profit snapshot = $60.07; contains snapshots of realized gains prior to 2022); Item # 4.D. Pared OFS in Fidelity Account - Sold 29+ at $13.06 (4/21/22 Post)(profit snapshot = $69.88); Item # 1.H. Pared OFS in Fidelity Account Sold 35 at $10.07- Highest Cost Lots That Could be Sold Profitably (7/22/21 Post)(profit snapshot = $12.44);; Item # 2.M. Pared OFS in Vanguard Taxable-Sold 20 at $7.2 (12/25/20 Post)(profit snapshot = $56.8); Item # 3.B. Sold 10 OFS at $12.04 (11/30/19 Post)(profit snapshot = $7.04); Item # 4.B. Sold 60 shares at $12 (11/13/19 Post)(profit snapshot = $13.11); Item # 3.A. Sold Highest Cost OFS Lots in Schwab Account - 50 shares at $12.27 and 50 at $12.47 (5/5/19 Post)(profit snapshots = $69.55)
OFS Realized Gains to Date: $1,151.34
B. Pared HIW Again -Sold 2 at $36.26 - Schwab Account:
Quote: Highwoods Properties Inc. (HIW) - Office REIT
Proceeds: $72.53
HIW "is a fully integrated office real estate investment trust (“REIT”) that owns, develops, acquires, leases and manages properties primarily in the best business districts of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. The Company conducts its activities through Highwoods Realty Limited Partnership (the “Operating Partnership”). As of September 30, 2024, we owned or had an interest in
Website: Highwoods
Last Discussed: Item # 3.F. Pared HIW - Sold 10 at $34.31; 5 at $35.77 (10/16/24)(profit snapshot $50.6)
I have been selling my highest cost lots, taking small taxable profits, reducing my dollar exposure which is a standard derisking process for me, and increasing my dividend yield by lowering my average cost per share.
New Dollar Exposure: $799.84
Last Buy Discussions: Item # 1.E. Added to HIW - Bought 1 at $18.13, 1 at $17.93; 3 at $17.74 (12/2/23 Post); Item # 1.J. Added to HIW - Bought 1 at $20.2; 1 at $19.85; 1 at $19.31; 1 at $18.87 (10/7/23 Post)
Profit Snapshot: +$22.8
New Average cost per share: $20.7 (38+ shares)
 |
| Snapshot Intraday on 10/23 after pare |
Dividend: Quarterly at $.50 per share, last increased from $.48 for the 2021 third quarter payment. For an Office REIT, HIW is unique increasing its dividend in 2021 and keeping the dividend steady thereafter. Other pure office REIT's slashed or eliminated their common stock dividends.
I am no longer reinvesting the dividend.
Yield at $20.7: 9.66%
Last Ex Dividend: 8/19/24
Last Earnings Report (Q/E 9/30/24):
Revenues: $204.323M
Net Income to FFO Calculation:
2024 FFO per share Guidance: $3.59-$3.63, raised from prior guidance of $3.54-$3.62.
Last Elimination: Item # 1.I. Eliminated HIW - Sold 7 at $47.22 (2/3/22 Post)
C. Pared AT&T in Two Accounts - Sold 5 at $22.37 in Schwab Account and 5 at $22.2 in Fidelity Account:
Quote: AT&T Inc. (T)
Proceeds: $222.9
T Analyst Estimates | MarketWatch
Investment Category: Bond Substitute
Last Discussed: Item # 2.E. Sold 23 T Various Prices in Schwab Account and Item # 2.F. Sold 30+T at $21.35 -Fidelity Account (9/12/24 Post)(Net Profit snapshots of +$46.75)
Profit Snapshots: +$38.89
Dividend: Quarterly at $.2775 ($1.11 annually), slashed from $.52 effective for the 2022 second quarter payment. AT&T Inc. (T) Dividend History | Nasdaq The slash was related to the Warner Media spinoff, which was another disastrous investment for AT&T. AT&T Announces Details for Completion of WM Spin-Off This was completed in April 2022.
I am no longer reinvesting the dividend.
New Average cost per share Schwab account: $17.81 (45+ shares)
 |
| Snapshot Intraday on 10/23 after pare |
Yield at New AC Schwab account: 6.233%
New Average cost per share Fidelity account: $16.35 (25+ shares)
 |
| Snapshot Intraday on 10/23/24 after pare |
Yield at New AC Fidelity Account: 6.789%
Last Earnings Report (Q/E 9/30/24): SEC Filed Press Release
The stock rallied after this report, and I sold into the rally.
Revenues: $30.2B, down from $30.4B
Free Cash Flow: $5.1B, down from $5.2B
GAAP E.P.S. = ($.03), down from $.48
Non-GAAP E.P.S. $.60
Adjustment to GAAP Net Income:
2024 Guidance: Adjusted E.P.S. $2.15-$2.25 with Free Cash flow between $17B-$18B
Long Term Debt: $127.964B, down from $128.489B.
D. Pared COLB in Fidelity Account - Sold Highest Cost 10 Shares at $28.2:
Quote: Columbia Banking System Inc. (COLB) - Bank Holding Company
Proceeds: $282
COLB Analyst Estimates | MarketWatch
Investment Category: Regional Bank Basket Strategy
Last Buy Discussions: Item # 1.J. Added to COLB - Bought 2 at $19.81 (6/3/23 Post); Item # 1.J. Added to COLB - Bought 2 at $19.81 (6/3/23 Post); Item # 2.K. Added 1 COLB at $20.31 (5/27/23 Post)
Last Discussed: Item # 2.E. Pared COLB in Schwab Account - Sold 5 at $25.92; 3 at $25.65 (10/19/24 Post)(Loss snapshot = -$24.09, reduced AC per share to $20.78 and raised the dividend yield to 6.93%)
Loss Snapshot: -$65.58
New Average cost per share this account: $24.33 (60+ shares)
 |
| Snapshot Intraday on 10/24 after pare |
Dividend: Quarterly at $.36 per share ($1.44 annually), last raised from $.30 effective for the 2023 second quarter payment.
COLB Dividend History | Nasdaq
Yield at $24.33: 5.92%
Last Earnings Report (Q/E 9/30/24): SEC Filed Press Release
Comparisons are to the 2023 third quarter.
Total Consolidated Assets: $51.9B
E.P.S. $.70,
NIM: 3.56%, down from 3.91%, and stable compared to the 2024 second quarter. I am anticipating that NIM will start to edge up in the 4th or in the 2025 first quarter, as deposit and borrowing costs decline and maturing securities mature with the proceeds reinvested at higher yields, but this will likely be a slow process and progress will be stunted some by lower loan yields.
Net Interest Income:
Operating Efficiency Ratio: 53.89%, up from 51.26%
NPL Ratio: .44%, up from .28%
Charge off Ratio: .31%, up from .25%
ROTE: 16.34%, down from 16.93%
Tangible Book Value per share: $17.81, up from $14.22
Total Capital Ratio: 12.5%
E. Eliminated VLY - Sold 20 at $9.09:
Quote: Valley National Bancorp (VLY)
Proceeds: $181.71
Investment Category: Regional Bank Basket Strategy
Profit Snapshot: +$46.91
Last Discussed: Item # 1.F. Restarted VLY - Bought 20 at $6.74 (6/7/24 Post) I discussed the 2024 first quarter report in that post. SEC Filed Press Release
Dividend: Quarterly at $.11 per share
Valley National Bancorp (VLY) Dividend History | Seeking Alpha
Dividend History: Highly Unfavorable.
The last change in the quarterly dividend was to slash the rate to $.11 from $.165 effective for the 2014 1st quarter payment. Since that slash, the dividend has not been raised over the past ten years.
Last Ex Dividend: 9/13/24
Last Earnings Report (Q/E 9/30/24): SEC Filed Press Release
Comparisons are to the 2023 third quarter.
E.P.S. $.18, down from $.27, but up from $.13 in the 2024 second quarter.
NIM: 2.85%, down from 2.95%
Efficiency Ratio: 56.13%, down from 56.72%
Charge Off Ratio: .34%, up from .04%
NPL Ratio: .6%, up from .52%
Coverage Ratio: 185.05% (allowance for credit losses to non-performing loans)
ROE: 5.7% (pathetic)
Total Capital Ratio: 12.56%
Tangible Book Value per share: $9.06, up from $8.63
Other Sell Discussions: Item # 2.M. Eliminated VLY in Fidelity Account - Sold 15+ at $11.76 and Item # 2.N. Eliminated VLY in Vanguard Account - Sold 15 at $11.75 (2/5/23 Post)(profit snapshots = $134.03);Item # 1.A. Eliminated VLY-Sold 102+ at $10.51 (9/11/2019 Post)(profit snapshot = $33.12); Item # 2.A. Eliminated VLY Sold 51+ VLY at $12.76 (7/25/18 Post)(profit snapshot = $98.62) Some sales were not discussed but snapshots are included in the main Regional Bank Basket Strategy post linked above.
Largest Gain: $197.85 in 2016
VLY Realized Gains to Date: $713.12
Current VLY Position: None
Consider to repurchase price: <$7
Preferred Stock Position: I currently own 10 VLYPP, a fixed-to-floating rate preferred stock that transitions, if not called, to a floating rate on 6/30/25: Item # 1.C. Bought 10 VLYPP at $16.31 (6/3/2023 Post) Valley National Bancorp 6.25% Preferred Series A (U.S.: Nasdaq)
VLY Bond Position: I own 2 VLY 4.55% junior bonds. Item # 3.G. Bought 2 Valley National 4.55% Junior Bonds Maturing on 6/30/25 at a Total Cost of 92.752 (6/10/23 Post)(YTM then at 8.447%); Bond Page | FINRA.org
F. Eliminated JHG - Sold 10 at $39.52:
Quote: Janus Henderson Group PLC (JHG)
Proceeds: $395.19
"As of June 30, 2024, Janus Henderson had approximately US$361 billion in assets under management, more than 2,000 employees, and offices in 24 cities worldwide." The headquarters is in London.
JHG Analyst Estimates | MarketWatch
Last Discussed: Item # 1.I. Started JHG - Bought 5 at $23.73; 5 at $23.2 (10/21/23 Post)
Profit Snapshot: $160.55
JHG Dividend History | Seeking Alpha
When I see this kind of dividend history, and taking into consideration my emphasis on generating income, I will likely be more interested in owning a short term SU bond issued by the company, particularly when the bond's yield is higher than the dividend yield at my total cost.
An important consideration is that the short term bond will pay me a sum certain at maturity or early redemption and the stock may lose value, potentially wiping out the dividend in a total return calculation.
Another consideration for JHG is earnings may be near a cyclical high. Asset management fee income will fluctuate based on the assets under management and the value of those assets.
Last Ex Dividend: 8/12/24
Last Earnings Report (Q/E 6/30/24): SEC Filed Press Release
GAAP E.P.S. $.81, up from $.54
Non-GAAP E.P.S. = $.85, up from $.62
JHG SU Bond: I own 2:
Item # 6.B. Bought 2 Janus Henderson 4.875% SU Bonds Maturing on 8/1/25 at a Total Cost of 97.818 (10/21/23 Post); Bond Page | FINRA.org The YTM was then at 6.178% at my TC when purchased.
G. Eliminated GVLU - Sold at $24.42:
Quote: Gotham 1000 Value ETF Overview
I am eliminating some small ball stock ETF positions where the dividends paid by the fund are immaterial.
Proceeds: $244.19
Last Discussed: Item # 3.B. Bought 10 GVLU at $21.91 (1/6/24 Post)
Profit Snapshot: $25.09
Dividends: Paid annually. The 2023 annual dividend was just $.3525 per share and was paid on 12/27/24. Many of the stocks owned by this fund pay no or nominal dividends. Without a significant capital gain distribution, the fund will not be view by me as a meaningful income source.
GVLU Stock Dividend History & Date
Top 10 Holdings as of 10/28/24:
H. Eliminated GCT - Sold 5 at $26.93:
Quote: GigaCloud Technology Inc. (GCT)
Proceeds: $134.68
Corporate Profile - GigaCloud Technology Inc.
Investment Category: Lottery Ticket Basket Strategy
Profit Snapshot: $23.23
Last Discussed: Item # 5.A. Bought 5 GCT at $22.9 (8/15/24 Post) I discussed the last earnings report in that post.
I. Eliminated HRZN in Fidelity Account - Sold 10 at $10.1:
Quote: Horizon Technology Finance Corp. (HRZN) - Externally Managed BDC
Proceeds: $101.04
I shifted this position to my Schwab account by adding 15 shares in that account. See Item # 3.E. below. Subsequent to this elimination, HRZN reported third quarter results which pressured the stock to the downside.
SEC Filed 2023 Annual Report (Risk factor summary starts at page 26 and ends at page 63)
10-Q for the Q/E 6/30/24 Summary of investments starts at page 7.
Profit Snapshot: $8.14
Net asset value per share history:
I view this history as a strong negative and would classify this BDC as deservedly hated. I have limited my dollar exposure in response and have attempted to produce some trading gains which I have done so far.
9/30/24: $9.06
6/30/24: $9.12 10-Q at page 3
12/31/23: $9.71 "As of December 31, 2023, there were four debt investments with an internal credit rating of 1, with an aggregate cost of $72.5 million and an aggregate fair value of $27.6 million. As of September 30, 2023, there were two debt investments with an internal credit rating of 1, with an aggregate cost of $41.5 million and an aggregate fair value of $15.5 million. As of December 31, 2022, there were three debt investments with an internal credit rating of 1, with a cost of $20.9 million and a fair value of $8.3 million." SEC Filed Earnings Press Release for the Q/E 12/31/23
12/31/22: $11.47
6/30/22: $11.69
3/31/22: $11.68
12/31/21: $11.56
12/31/20: $11.02
3/31/20: $11.48
12/31/19: $11.83
12/31/18: $11.64
12/31/17: $11.72
12/31/16: $12.09
12/31/15: $13.85
12/31/14: $14.36 10-K at page 54
12/31/13: $14.14
12/31/12: $15.15
12/31/11: $17.01
October 2010: IPO at $16, net of $14.88 to HRZN after underwriting discount: Prospectus
Dividend: Monthly at $.11 per share
HRZN Stock Dividend History & Date
Next Ex Dividend: 11/15/24
Last Sell Discussions: Item # 2.A. Eliminated HRZN in my Vanguard Account - Sold 20 at $12.05 (11/25/23 Post)(profit snapshot = $5); Item # 6.C. Pared HRZN - Sold 5 at $13.32 (11/15/22 Post)(profit snapshot = $7.4)
Last Buy Discussion: Item # 6.B. Added 5 HRZN in Schwab Taxable Account at $9.7 (10/18/22)
Last Earnings Report (Q/E 6/30/24): SEC Filed Earnings Press Release
This was the last report that I had when these shares were sold. I discussed the third quarter quarter report in Item # 3.E. below.
Net investment Income: $12.9M
NII per share: $.39
Spillover Income: $1.28 per share
Annualized portfolio yield on debt investments: 15.9%
Warrant and equity positions in 99 companies.
Company Estimate of Loan Credit Quality:
"As of June 30, 2024, there were five debt investments with an internal credit rating of 1, with an aggregate cost of $108.4 million and an aggregate fair value of $48.0 million."
Largest Gain: Item # 1.B. Eliminated HRZN - Sold 30 at $11.8 (11/18/18 Post) (profit snapshot = $53.09)
Goal: Any total return in excess of the dividend.
HRZN Realized Gains to Date: $75.73 (only 68 shares traded)
J. Pared SBRA Again - Sold Highest Cost 7 Shares at $19.25 - Fidelity Account:
Proceeds: $123.76
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Website: Sabra Health Care REIT
Last Discussed: Item # 4.F. Pared Duplicate Position in SBRA - Sold 2 at $18.71 - Fidelity Account (10/24/24 Post)(profit snapshot = $7.77)
Last Buy Discussions: Item # 1.L. Added to SBRA - Bought 1 at $11.28 (5/13/23 Post); Item # 4.I. Added to SBRA - Bought 1 at $12.1; 2 at $11.67 (5/5/22 Post)
Profit Snapshot: $32.77
Old Average cost per share this account: $12.02
New Average cost per share this account: $11.6 (42 shares)
 |
| Snapshot Intraday on 10/29/24 after pare |
Dividend: Quarterly at $.30 per share
Yield at $11.6: 10.345%
Last Ex Dividend: 8/19/24
Last Earnings Report (Q/E 6/30/24): I discussed this report here: Item # 4.H. Pared SBRA in Fidelity Account - Sold 15+ at $16.6 (8/9/24 Post)(profit snapshot = $19.24); SEC Filed Press Release and SEC Filed Supplemental
The third quarter report is scheduled for release after the market closes today. I will discuss it in a comment.
I do not have access to any analyst reports.
K. Pared SBRA in Schwab Account - Sold 10 at $19.22:
Proceeds: $192.21
See Item # 2.J. above.
Profit Snapshot: $46.4
Old Average cost per share this account: $13.06
New Average cost per share this account: $12.79 (55+ shares)
 |
| Snapshot Intraday on 10/29/24 after pare |
I am no longer reinvesting the dividend.
Yield at New AC = 9.38%
L. Eliminated UNB - Sold 10 at $29.31:
Quote Union Bankshares Inc. (UNB)
Proceeds: $293.1
Investment Category: Regional Bank Basket Strategy
I was not impressed with the third quarter earnings report.
Profit Snapshot: $76.2
Last Discussed: Item # 2.J. Restarted UNB - Bought 5 at $22; 5 at $$21.38 (6/20/24 Post)
Dividend: Quarterly at $.36 per share ($1.44 annually), last raised from $.35 effective for the 2023 1st quarter. The dividend was at $.26 per share in 2014.
UNB Dividend History | Seeking Alpha
Last Ex Dividend: 10/25/24 (owned as of)
Last Earnings Report (Q/E 9/30/24): SEC Filed Press Release
Comparisons are to the 2023 third quarter
This small bank holding company does not provide much information in its earnings press releases. More information will be provided next month when UNB files its quarterly 10-Q.
Net Income: $1.3M, down from $2.5M
E.P.S. = $.29 down from, $.56
"The decrease in earnings for the comparison periods was primarily due to the impact of the previously announced strategic balance sheet repositioning executed during the third quarter. The Company's wholly-owned subsidiary, Union Bank, executed the sale of $38.8 million in book value of its lower-yielding available-for-sale debt securities for a pre-tax realized loss of $1.3 million, which was recorded in the third quarter of 2024."
"Credit loss expense of $425 thousand was recorded for the third quarter of 2024 compared to a benefit of $139 thousand recorded for the third quarter of 2023. The increase in expense was to support loan growth during the period and was not due to a deterioration in credit quality." $425K is a big deal for this bank.
Information about owned securities is provided in the 10-Q for the Q/E 6/30/24 and IMO unfavorably reflects on this bank's interest rate risk management:
10-Q at pages 6-7
Most of the unrealized losses as of 6/30/24 were concentrated in mortgage backed securities.
Banks were holding low yielding MBS when inflation was in hyperdrive in 2021 and into early 2022 when they could have been sold for small losses or gains. It was obvious that the FED would have to end QE and ZIRP given the inflation problem, yet banks hold onto these low yielding securities whose duration increases with the rise in interest rates, creating substantial unrealized losses by continuing to own them when rates were spiking higher.
During the third quarter, UNB decided to take a hit by selling at a loss some of the low yielding owned securities
Other Sell Discussions:Item # 5.B. Eliminated UNB - Sold 20+ at $25 (10/28/23 Post)(profit snapshot = $97.66); Item # 3.G. Eliminated UNB in Schwab and Vanguard Accounts - Sold 5 at $22 and 5 at $22 (7/22/23 Post)(profit snapshots = $35.1); Item #2 C. Sold 50 UNB at $24.56 (1/25/14 Post)(profit snapshot =$238.61); Item # 1 Sold 50 UNB at $19.5 (7/26/11 Post)(profit snapshot = $59.08)
UNB Realized Gains to Date: $429.92
Current Position: None
Consider to restart: $22 or lower.
M. Pared STWD in Fidelity Account - Sold Highest Cost 5 Shares at $19.91:
Quote: Starwood Property Trust Inc. (STWD) - a Complicated Hybrid REIT
Proceeds: $99.58
Profit Snapshot: $4.13
Last Earnings Report (Q/E 6/30/24): I discussed this report here: Item # 4.A. Pared STWD in Fidelity Account - Sold 4 at $20(8/29/24 Post)(profit snapshot = $27.88), SEC Filed Press Release)
Buy Discussions: Item # 1.H. Added STWD in Fidelity Taxable Account-Bought 2 STWD at $17.18; 2 at $16.91; 1 at $15.24, 1 at $10.36; 1 at $9.3; 1 at $8.74; 1 at $12.45 ( 4/18/20 Post); Item # 1.C. Added to STWD in Fidelity Taxable Account-Bought 1 at $15.66, 1 at $15.12, 1 at $14.82; 1 at $13.74 (7/25/20 Post); Item # 2.D. Added to STWD in Fidelity Taxable-Bought 1 at $14.29 (12/5/20 Post)
Old Average cost per share: $14.24
New Average cost per share: $13.03
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| Snapshot Intraday on 10/29/24 after pare |
Dividend: Quarterly at $.48 per share ($1.92 annually)
Starwood Property Trust, Inc. - Stock - Dividend History
Yield at New AC = 14.735%
Next Ex Dividend: 12/31/24
Last Ex Dividend: 9/30/24
Other Sell Discussions: Item # 3.E. Eliminated 1 of 2 Duplicate Position in STWD - Sold 13 at $20.72 (8/5/23 Post)(profit snapshot = $87.37); Item # 3.I. Pared STWD -Sold 5.105 at $25.43 (5/14/21 Post) (profit snapshot = $32.18); Item # 1.O. Sold 5 STWD at $25.22 (3/20/21 Post)(profit snapshot = $27.84); Item #1.N. Pared 7 STWD at $23.74 (3/13/21 Post)(profit snapshot = net at $14.56); Items 2.C. Pared STWD in Vanguard taxable-Sold 10 at $20.44 and 2.D. Pared STWD in Fidelity Taxable-Sold 10 at $20.95 (3/6/21 Post)(combined profit of $8.25); Item # 1.A. Sold 10 STWD at $25.96 (2/16/2020 Post)(profit snapshot = $47.74)
STWD Realized Gain To Date: $249.95
Goal: Any realized gain in excess of the dividend payments.
3. Small Ball Buys:
A. Added to UGI - Bought 5 at $24.76; 5 at $24.26:
Quote: UGI Corp. (UGI) - Holding company
Cost: $245.08
UGI Analyst Estimates | MarketWatch As of 10/28/24, the average E.P.S. estimate for 2024 was $2.95 and at $3.03 for 2025.
Investment Category: Bond Substitute with some dividend growth.
Average cost per share: $24.79 (20 shares)
Dividend: Quarterly at $.375 per share ($1.5 annually), last raised from $.36 effective for the 2023 third quarter payment. The dividend was at $.2175 in the 2014 4th quarter after a 3 for 2 stock split. Dividends | UGI Corporation
Yield at $24.79 AC: 6.05%
Last Ex Dividend: 9/16/24
I discussed the last earnings report in my last post: Item # 3.A. Started UGI - Bought 5 at $25.2; 5 at $24.96 (10/24/24 Post)
The next report is scheduled for release on 11/21 after the market closes. That will be the earnings report for the 4th fiscal quarter.
B. Restarted GPC - Bought 1 at $113.51:
Quote: Genuine Parts Co.
Website: Genuine Parts Company
GPC is a global distributor of automotive and industrial parts.
The automotive parts segment " operates in the U.S., Canada, Mexico, France, the U.K., Ireland, Germany, Poland, the Netherlands, Belgium, Spain, Portugal, Australia and New Zealand, and accounted for approximately 63% of total revenues for the nine months ended September 30, 2024." In the U.S. more than 80,000 parts are sold under the NAPA brand.
The industrial parts segment "operates in the U.S., Canada, Mexico, Australia, New Zealand, Indonesia and Singapore, and accounted for approximately 37% of our total revenues for the nine months ended September 30, 2024." 10-Q at page 18
Last Sold: Item #6.D. Eliminated GPC - Sold 1 at $178.35 (11/15/22 Post)(profit snapshot = $57.1) I noted in that post that I had a fair value range at that time of $121-146. That range explains why I sold the 1 share that had been bought at $121.24. Item # 2.L. Bought 1 GPC at $121.24 (3/24/22 Post) I never got around to buying more.
Investment Category: Dividend Growth
GPC Analyst Estimates | MarketWatch
Genuine Parts Company Key Metrics | Reuters
The stock declined $30.1, or 20.97%, on 10/23 in response to an earnings report and lowered guidance. GPC Stock Historical Prices & Data - Yahoo Finance
I noted the decline and decided to restart a position the next day.
A number of brokers slashed their ratings and/or price targets.
Dividend: Quarterly at $1 per share, last raised from $.95 effective for the 2024 second quarter payment.
Genuine Parts Company - Dividends
GPC is an S&P 500 Dividend Aristocrat, which means that it has raised its dividend for at least 25 consecutive years. I have a small ball position in an ETF that owns those stocks. NOBL | S&P 500 Dividend Aristocrats ETF | ProShares Currently, GPC has the lowest weighting in that ETF which is rebalanced quarterly to equal weightings. r
Yield at $113.51: 3.52%
Last Ex Dividend: 9/6/24
Last Earnings Report (Q/E 9/30/24): SEC Filed Earnings Press Release and 10-Q
2024 E.P.S. Guidance was lowered $6.6 to $6.8 down from the previous range of $8.55 to $8.75
2024 Free Cash Guidance remained unchanged at $.8B-$1B
The company noted that there were "market headwinds" negatively its business in Europe and Australia.
Revenues: $5.97+B, up from $5.824+B
GAAP E.P.S. = $1.62, down from $2.49
Non-GAAP E.P.S. $1.88, down from $2.49
The consensus was $2.43.
There is no rational reason for near term optimism IMO.
Margins Declined in both segments compare to the 2023 3rd Q.:
"Automotive segment profit decreased 18.6% compared to the same period in 2023, and Automotive segment profit margin decreased to 6.9% compared to 8.9% in the same period last year. We estimate that 40% of these declines relates to persistent segment operating cost pressures from ongoing inflation, particularly personnel costs and rent. The remainder primarily reflects the effects of rising freight costs, technology investments and changes in sales mix. Partially offsetting the declines was a 20 basis point segment profit margin benefit related to acquisitions, particularly acquired stores in U.S. Automotive such as MPEC and Walker."
"Industrial segment profit decreased 8.5% compared to the same period in 2023 and Industrial segment profit margin was 11.9%, down 1.0% from the prior year. These declines primarily relate to persistent segment operating cost pressures from inflation, particularly personnel costs and rent. For the nine months ended September 30, 2024, Industrial segment profit decreased 2.6% compared to the same period last year and Industrial segment profit margin decreased to 12.2% compared to 12.3% in the same period in the previous year, based on similar inflationary segment operating cost pressures."
Quotes from page 22, 10-Q
GAAP to Non-GAAP:
Nine Month 2024 Results:
The negative trend is not likely to right itself in a quarter or two, but I see no reason why the downtrend will continue long term.
Analyst Reports (available to Schwab customers):
Morningstar (10/22/24): 4 stars with a fair value of $132 lowered by 11% in response to the earnings report.
S&P (10/22/24): 3 stars with a $15 reduction in the 12 month PT to $125. The target is based on 13 times a 2025 $9.6 estimate down from 18.1 P/E historical P/E to forward estimates. If the E.P.S. turned out to be $9.6 in 2025, and if investors were willing to pay a 18.1 multiple, the price would be $173.76 and at $144 with a 15 multiple. The PT of $125 suggests with the 13 multiple suggests significant doubt on the $9.6 number being hit next year.
Fair Valuation: I am changing my fair valuation to $110 to $135, down from $121-$146 when I last eliminated a position. This downgrade is based on recent earnings results and the current forward guidance. This range is looking at the next 12 months using GPC's guidance and its explanations of headwinds which may be temporary but still likely to last for 1 to 3 quarters which is my current guess.
If I was valuing the business with a 5 year time frame, the valuation range would expand to $140 to $170, based on an opinion that many of the headwinds will dissipate including the inflation issue identified by the company and quoted above.
Purchase Restriction: 1 share lots with each subsequent purchase required to be a the lowest price in the chain.
C. Added to WU - Bought 5 at $11.26; 3 at $10.86:
Quote: Western Union Co. (WU)
Cost: $88.87
Last Discussed: Item # 5.B. Added to WU - Bought2 at $11.67 (9/26/24 Post); Item # 1.C. Added to WU - Bought 3 at $11.75 (8/29/24 Post)
Investment Category: Bond Substitute
Western Union Profile Page at Reuters
WU Key Metrics Page at Reuters
WU Analyst Estimates | MarketWatch
The Western Union Company - Investor Relations
SEC Filed 2023 Annual Report (Risk factor summary starts at page 21 and ends at page 42)
New Average cost per share: $11.78 (65+ shares)
Dividend: Quarterly at $.235 per share ($.94 annually)
I am no longer reinvesting the dividend.
Yield at $11.78: 7.98%
Last Ex Dividend: 9/16/24
Last Earnings Report (Q/E 9/30/24): SEC Filed Press Release and 10-Q
Comparisons are to the 2023 third quarter.
GAAP Revenues: $1.04B, down 6%, adjusted to +1%
GAAP E.P.S. $.78
Non-GAAP E.P.S. $.46, up from $.43
"GAAP EPS in the current period included a benefit of $0.40 from a settlement with the U.S. Internal Revenue Service regarding the Company’s 2017 and 2018 federal income tax returns. Adjusted EPS in the current period benefited from lower share count and a lower adjusted effective tax rate, partially offset by a lower contribution from Iraq."
2024 Outlook: Adjusted E.P.S $1.7-$1.8
Other Recent News: Singtel and Western Union Announce Agreement on Sale of Dash (10/23/24): WU is buying Dash which is described in the press release as "Singapore’s leading all-in-one mobile wallet that lets customers pay, remit, save, invest and insure from one app. Launched in 2014, it has over 1.4 million users." The price was not disclosed.
Analyst Reports (available to Schwab customers):
Morningstar (10/24/24): 5 stars with a fair value estimate of $17 and a narrow moat.
S&P: 3 stars with a 12 month PT of $13. The analyst uses a 7.3 multiple to the estimated 2025 E.P.S. of $1.78.
D. Restarted LKQ - Bought 5 at $37.49:
Quote: LKQ Corp. (LKQ) - Component of the S&P 500.
Cost: $187.47
LKQ is a leading distributor of aftermarket and recycled auto parts. Reuters Profile Page
Reuters Key Metrics -Valuation Page
Last Discussed Item # 4.F. Eliminated LKQ - Sold 5 at $42.64 (8/29/24 Post)(profit snapshot =$6.22) -Item # 1.E. Bought 5 LKQ at $41.4 (7/5/24 Post) After reviewing the earnings report for the second quarter, I thought the shares would decline below my first purchase price, so I eliminated the position. SEC Filed Earnings Press Release for the Q/E 6/30/24
LKQ Analyst Estimates | MarketWatch As of 10/28, the average E.P.S. estimate for 2025 is at $3.68 and at $4.86 in 2026.
Dividend: Quarterly at $.30 per share, last raised from $.275 per share effective for the 2023 4th quarter payment.
Yield at $37.49: 3.2%
Next Ex Dividend: 11/14/24
Last Earnings Report (Q/E 9/30/24): SEC Filed Press Release
Comparisons are to the 2023 third quarter.
Revenues: $3.584B, up from $3.568B
E.P.S. $.73, down from $.78
Non-GAAP E.P.S. $.88, up from $.86
9 Month Non-GAAP E.P.S. $2.68, down from $2.98
GAAP to Non-GAAP Reconciliation:
2024 Outlook: Lowered Adjusted E.P.S. to $3.38-$3.52 from $3.5-$3.7
S&P (10/24/24): 3 stars with a 12 month PT of $35, lowered by $5 in response to the earnings report and lowered guidance. The analyst also noted that, as reflected in report for GPC discussed above, the environment for distributors is currently difficult.
Morningstar (10/28/24): 4 stars with a fair value estimate of $52 and a narrow moat. The FV estimate was lowered from $53 in response to the third quarter report.
Purchase Restriction: 1 or 2 share lots with each subsequent purchase required to be at the lowest price in the chain.
E. Added 10 HRZN in Schwab Account at $10.11; 5 at $9.71:
Quote: Horizon Technology Finance Corp. (HRZN) - Externally Managed BDC
The 5 share purchase was made after HRZN reported in its 3rd quarter earnings.
See Item # 2.I. above where I discuss the second quarter report. I am just consolidating a small ball position in my Schwab account.
Cost: $149.58
New Average cost per share: $10.73 (35 shares)
Dividend: Monthly at $.11 per share ($1.32 annually)
Yield at $10.73: 12.3%
Next Ex Dividend: 11/15/24
I currently view this externally managed BDC to be deservedly hated. This BDC will need to realize some significant gains on equity positions to increase net asset value per share if its loss history on loans continues.
Last Earnings Report (Q/E 9/30/24): SEC Filed Earnings Press Release
NII per share: $.32, down from $.53
Undistributed Estimated Spillover Income per share: $1.27
Annualized Yield on debt investments = 15.9%
Owned equity positions in 103 companies
Harvested a $33.9M loss on investments or $.93 per share. Even though this is a highly unfavorable number, the net asset asset per share barely changed from the $9.12 reported as of 6/30/24, indicating that the loans sold at a loss had already been significantly written down prior to the third quarter.
Net Unrealized Appreciation per share (claimed by the company): $.8
Company estimate of loan credit quality:
10-Q for the Q/E 9/30/24 Summary of investments starts at page 7. The non-accrual loans are indicated by (13) or (14) next to the name. Those are NextCar Holding Company, Unagi, and Swift Health System.
Company estimate of interest rate changes on net investment income:
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| Pages 68-69 10-Q |
4. Equity Preferred Stocks:
A. Eliminated DCOMP - Sold 50 at $19.92:
Quote: Dime Community Bancshares 5.5% Non-Cumulative Preferred Series A
Proceeds: $995.98
Issuer: Dime Community Bancshares Inc. (DCOM) - A Bank Holding Company
Profit Snapshot: Net of $104.78
Last Discussed: Item # 4.C. Added to DCOMP - Bought 10 at $15 - Fidelity Account (10/21/23 Post); Item # 2.D. Added to DCOMP - Bought 10 at $13.85 (6/10/23 Post)
The price decline during 2022 was caused by the increase in interest rates.
The price decline in 2023 can be attributed to both a continued rise in rates and generalized credit risk concerns applicable to bank holding preferred stocks caused by the FDIC seizing the operating banks of 3 bank holding companies after deposit runs.
The downside for an equity preferred stock issued by a bank holding company is zero when and if the FDIC seizes the operating bank. While there may be exceptions, senior debt owed by the bank holding company would generally far exceed the value of remaining assets, and a bankruptcy filing would occur after the FDIC seizure of the main asset.
Par Value: $25
Coupon: 5.5% paid on the $25 par value
Placement in the Capital Structure: Equity preferred stock, senior only to common stock and junior to all debt.
Dividend: Paid quarterly, qualified and non-cumulative.
Next Ex Dividend: 11/8/24
Stopper Clause: Standard. (see pp. S-16 and S-17 of the prospectus). This clause enforces the preferred shareholders' preferential claim to cash against only the common stockholders. The common stock dividend has to be eliminated before eliminating the preferred stock dividend.
Issuer Optional Call: On or after 2/15/25. Given the low coupon, I would not currently anticipate that this security will be called in 2025. To be called, the ten year treasury yield would probably need to fall to less than 2%, probably closer to 1.5%, and DCOM would need to have a credit risk profile that would enable it to call DCOMP and refinance at a materially lower coupon.
Last Sell Discussions: Item # 2.I. Eliminated DCOMP in Schwab Account - Sold 10 at $22.3 and Item # 2.J. Eliminated DCOMP in Vanguard Taxable Account - Sold 15 at $21.77 (2/5/23 Post)(profit snapshots = $47.55); Item # 2.A. Pared DCOMP in Fidelity Account - Sold 30 out of 80 at $25.8 (1/9/21 Post)(profit snapshot = $170.85); Item # 2.B. Sold 10 DCOMP at $21.14 and 10 at $22.06-Highest Cost Lots Fidelity Taxable Account (9/5/20 Post)(profit snapshot = $26.23)
Current Position: None
DCOMP Realized Gains: $349.41
5. Treasury Bills Purchased at Auction:
A. Bought 7 Treasury Bills at the 10/28/24 Auction:
91 Day Bills
Matures on 1/30/25
Interest = $79.45
Investment Rate: 4.605%
B. Bought 3 Treasury Bills at the 10/28/24 Auction:
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182 Day Bills
Matures on 5/1/24
Interest: $65.6
Investment Rate: 4.483%
C. Bought 2 Treasury Bills at the 10/29/25 Auction:
1 Year Treasury Bill
Matures on 10/30/25
Interest: $82.91
Investment Rate: 4.291%
I bought 1 in a Roth IRA account.
Real Yield of 1.67% consisting of 1.625% coupon and a purchase at less than par value.
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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.
