BCE, BTB.UN:CA, CNQ, CVE, DOW, EMP, FSK, GMAB, HNNA, NTST, SNY, VLYPP, WHF

Economy: 

As expected, the Fed cut the federal funds to 4.25% - 4.5% from 4.5% to 4.75%. Federal Reserve issues FOMC statement

The Dot Plot indicates that a majority of Fed members are forecasting two rates cuts in 2025, down from 4 in its September 2024 projections. 

The Fed - December 18, 2024: FOMC Projections:

Comparisons are to the September 2024 projections:

The FED raised its 2024 Real Growth prediction to 2.5% from 2%.

The forecast for 2024 Core PCE inflation was raised to 2.8% from 2.6%. The PCE inflation prediction rose .1% to 2.4%.

The 2024 unemployment rate was cut .2% to 4.2%. 

Note the change in FED members views on risks to core PCE inflation: 

Dot Plot: 

 

The Fed cut the federal funds rate by 50 basis points at its 9/18/24 meeting. 

The most recent low for the ten year treasury yield was at 3.51% on 9/16/24. 

What has happened to the ten year yield, the real yield on the ten year TIP and the 10 year TIP breakeven inflation rate starting on 9/16 through yesterday:  

9/16/24: 

Ten Year Treasury Yield: 3.51%

Ten Year TIP Real Yield: 1.54% 

Ten Year TIP Breakeven Inflation Rate = 1.97% (viewed as the market's prediction of the average annual CPI rate over the next ten years) 

12/18/24

Ten Year Treasury Yield: 4.5%, up 99 basis points

Ten Year TIP Real Yield: 2.18%, up 64 basis points

Ten Year TIP Breakeven Inflation Rate: 2.32%, up 35 basis points. 

As the FED cuts the FF rate, the average annual forecast for CPI over the next ten year rose by .35%.  That will cause the non-inflation protected yield to rise but only explains part of .99% increase in the ten year treasury yield. 

I would attribute the rest of the rise to two factors: 

(A) Growing uncertainty for a variety of reasons relating to what Trump may do as President that the average inflation forecast embedded in breakeven inflation rates will be right or, put another way, the inflation risk is to the upside but not yet fully factored into the breakeven inflation rates. 

(B) Interest rate normalization after a long period where the FED suppressed the yield below the inflation rate. Once that monetary policy stops, the ten year treasury yield will rise to reflect an historically normal spread of 2% over the anticipated inflation rate. This process is similar to holding a balloon underwater and then releasing it, except interest rate normalization occurs slowly.  

++

Stock investors do not believe that Trump will actually carry through with his tariff threats which would start a trade war. If he actually does what he said that he will do, it will be a shock event for investors IMO.  

Peter Navarr0, who was recently released from prison and appointed by Trump to be his trade advisor, has informed us that tariff increases are not inflationary.  Trump trade aide Peter Navarro denies tariff plans will spur inflation 

It does sound like Trump is serious about starting a trade war, something similar to what happened after the republicans in Congress passed the  Smo0t-Hawley Tariff Act of 1930 that resulted in a trade war and contributed to the Great Depression. The Smoot-Hawley Tariff and the Great Depression 

The Canadian Finance Minister resigned earlier this week since the PM Trudeau was not in her opinion taking Trump's threats seriously enough. Canadian finance minister resigns, citing Donald Trump's tariff threat 

Trump Is About to Betray His Rural Supporters - The Atlantic and the author's interview at CNN, Ron Brownstein: Trump is about to betray his rural supporters - YouTube

Much of the following information can be found in that article and other sources referenced in the following discussion. 

When Trump started his tariff war during his first term, countries negatively impacted by the tariffs retaliated, as expected, by increasing their tariffs on U.S. exports including tariff increases on farm products like soybeans, pork and corn. 

That led, as expected, to lower U.S. farm exports to those countries. 

While Trump is fond of saying that U.S. tariffs are like free money to the U.S. government, he responded to the financial damage caused by the trade war that he started by having the republicans in Congress shower the agricultural sector with $60 billion in funds. 92 Percent of Trump’s China Tariff Proceeds Has Gone to Bail Out Angry Farmers | Council on Foreign Relations 

The net effect was that the money from the increased Trump tariffs were largely offset by that federal outlay. 

But the story does not end there. 

Foreign countries impacted by Trump's tariffs have lowered  their purchases of U.S. farm products to this very day. The U.S. is just not a reliable trading partner in the Trump era. 

In 2016, U.S. farmers sold almost as much soybeans to China as Brazil did. Now Brazil sales over 3 times as much soybeans to China as the U.S. farmers.  

And Trump's U.S. tariff increases raised the price of products to U.S. consumers, both in what they had to pay for the foreign importer product as the tariff increase was passed on in the price but also for domestically produced competitive products as U.S. companies raised their prices. 

I have linked a WSJ YouTube video that points out that Trump's tariff on washing machine imports raised prices for both imported washing machines but also those made in the U.S. and allowed all manufacturers a price umpbella to increase prices on dryers even though they were not subject to Trump's tariff increase. Why Economists Hate Trump's Tariff Plan | WSJ - YouTube

If Trump carries through with the policies that he advanced during the campaign, rural voters will suffer a disportionate negative impact, but I doubt that will dent their fervent support for Trump and his party. 

The reason is simple. They simply will not link Trump's policies to the negative impacts and will accept Trump's claim that the policies, while objectively producing negative impacts on those voters, are actually helping them, just one small part of the Trump's highly successful Orwellian created alternate reality. 

But, the fact that those voters will not blame Trump will not change the negative consequences flowing from the implementation of Trump's policies on his rural supporters that go far beyond just the inflationary impacts and lower exports flowing from tariff increases. 

Mass deportation of undocumented agricultural workers, according to estimates made by the Peterson Institute, would cut U.S. agricultural production by 1/6th by 2028 and reduce U.S. exports of agricultural products by almost 50%. The international economic implications of a second Trump presidency | PIIE The study can be downloaded at that website for review. 

Majorities in poll give Trump green light for some controversial policies Support for Trump's tariffs proposals is the weakest among the more controversial policy proposals. 

If Trump had shown any indication that he understood the negative impacts of tariffs, there would possibly be some hope that he would not implement them as President and will refrain from starting a tariff war. 

Everything that Trump has said during his first term and after he left office, including the false claims that foreign countries pay U.S. tariffs, indicate that he will not back off and is incapable of understanding the negative implications of tariff hikes on inflation and GDP which anyone with average intelligence could learn with about 1 hours of research. 

Fact check: Trump makes false claims about immigration, tariffs and global conflicts | CNN Politics (12/16/24) 

And, what will be the inflationary impact when and if Trump implements his tariff hikes, causing manufacturers to relocate production to the U.S. from countries where production costs are much lower due in part to lower wages? Sure, there would be more U.S. manufacturing jobs, and that will help part of the population, but at what cost to the overall economy and U.S. consumers in general? 

China reported that retail sales rose 3% in November compared to 11/23, which was below the consensus estimate of 4.6% and the prior months 4.4% increase.  

++++

Allocation Shifts Discussed in this Post:

Treasury Bills Purchased at Auction: $5,000 in principal amount. 

I lowered my purchase amount in front of the FED's decision on 12/18 and will then decide what to do.  Three to 4 year maturities are starting to look slightly more attractive. I want to see whether the trend higher in yields continues.

Corporate Bonds: $10,000 in principal amount 

Tennessee Municipal Bond (Aaa rated): $5,000 in principal amount

Net Inflow U.S. Common Stocks: +$1,060

(consisting of $1,734.77 in purchases minus $674.05 in proceeds)

Net Inflow Canadian REIT: +C$345  (converted to US$245 for allocation purposes)

Net Inflow Canadian and U.S.  Stocks:  +$1,305

Outflow Stock Funds: -$1,436.67

Outflow Stocks/Stock Funds: -$131.67

I will be transitioning into a net inflow in my next post, primarily due to both the recent decline in stock prices and an unwillingness to continue selling at lower prices. The net inflow into stocks discussed in the next post will probably be around $1K.    

Exchange Traded Baby Bond (EMP): +$217.75

Equity Preferred Stock: -$249.49 (profit at $86.25) 

2024 Net Outflow Stocks/Stock Funds: -$69,492.76

10-Year Breakeven Inflation Rate -St. Louis Fed

5-Year Breakeven Inflation Rate -St. Louis Fed The five year TIP will be auctioned later today. 

I mentioned in a comment published yesterday that the real yield for the five year TIP had a meaningful percentage increase on 12/18 in response to the FED's rate cut announcement and revisions in its economic forecasts that increased its 2024 estimates for real GDP growth and PCE inflation and lowered its forecast for the unemployment rate.   

November Treasury Yield Curve: 

November Treasury Real Yield Curve:  

10 Year TIP Breakeven Inflation Rate as of 12/18/24 = 2.32% 

++++

Portfolio Issues: 

PRWCX – T. Rowe Price Capital Appreciation Fund - Morningstar (closed to new investors)

I previously discussed paring my position by selling 50 shares at $38.94. Item # 1.A. Sold 50 Shares of PRWCX at $38.94 (11/14/24)(profit snapshot =  $967.35). 

After the pare, I still owned 1,003.95 shares. 

PRWCX went ex dividend yesterday for its annual dividends: 

Ordinary income, short and long term capital gains  

Total = $3.59 per share

Total: $3,604.18 paid into my T.Rowe Price U.S. Treasury MM fund. 

I have been taking the dividends in cash for several years, viewing that approach as an alternative to selling shares. 

If the stock market tanks next year, I will add $500 to this fund. Otherwise I will spend all of the dividend.  

If the fund's price recovers all or most of the $3.59 dividend in the 2025 first quarter, which reduced NAV per share by an equivalent amount, I will sell 50 shares. 

Rise in Intermediate and Long Term Treasury Yields: 

The FED cuts the FF range by 50 basis points on 9/18/24. Federal Reserve Board - Federal Reserve issues FOMC statement 

On 9/18/24, the 2 and  10 year treasury notes closed at 3.59% and 3.7% yields respectively.  Resource Center | U.S. Department of the Treasury

On 11/7/24, the FED cut the FF range by another 25 basis points. The 2 and 10 year treasury notes closed that day at 4.21% and 4.31%. Federal Reserve Board - Federal Reserve issues FOMC statement 

Yesterday, the FED cut the FF range by another 25 basis points and signaled that it anticipated two rate cuts in 2025. The 2 and 10 year treasury note yields bose rose 10 basis points in yield to close at jumped in response, closing at 4.35% and 4.5%.

I am attempting to assess whether this trend will persist which will make 2 year treasury notes more appealing to me, compared to treasury bill purchases. 

Corporate Bond Redemption Proceeds 12/16/24:  $18,000 of which $16,000 was in my Fidelity Account

The only early redemption was the 4 Oneok 4.9% SU that would have matured on 3/15/25. This leaves me with with 2 Oneok SU bonds that mature on 9/15/25. 

Of those corporate bonds, the largest "profit" was in the 4 Retail Opportunity bonds: 

"Profit" of $104.02

The "profit" is not a capital gain, but is transformed by the IRS into realized market discount income taxed as interest: 

Realized Market Discount of $104.02

In my Fidelity account, I currently have $4,473,24 in realized bond "profits" that will be taxed as interest income.  

The largest "profit" per bond was the 2 Kilroy SU at $87.92: 

I also owned the Kilroy bond in my Vanguard taxable account where my realized gain/loss page shows that the "profit" of $99.92 is classified as "market discount" rather than a capital gain:

+++

1. Small Ball Buys: 

I discuss below two USD priced Canadian energy company stock purchases: CNQ and CVE. Both trade on the NYSE. The USD price will reflect the CAD price on the Toronto exchange converted into USDs. 

After a purchase, a decline in the CAD/USD exchange rate will lower the dividend yield and will cause the USD price shares to underperform the same shares traded in Toronto and priced in CADs. 

At the Marketwatch website, I can draw a year chart comparing the performance of USD price CVE and CVE:CA. I know that the CAD has fallen in value so I would expect CVE:CA to have outperformed CVE. 

Over the past year through 12/13/24, CVE has declined 6.15% whereas CVE:CA has fallen only .18%

Say the CAD/USD exchange rate returned to 1 for 1. CVE:CA closed at C$21.71 (12/13). CVE is not an ADR but the same ordinary shares traded in Toronto. The USD price would consequently be US$21.71 if the CAD/USD exchange rate was at 1:1. The actual close for the USD price shares was at US$15.25 or 29.76% lower than at a 1:1 conversion rate. 

I don't see the CAD returning to a 1 for 1 exchange rate in my lifetime, though it is within the outer realm of possibilities. The 1 CAD was briefly worth more than 1 USD in 2007 and 2011.  

I will attempt to play long term CAD/USD trends in my IB account where I own CADs and securities purchased on the Toronto exchange using CADs.  

I will consider reducing my CAD position when the CAD/USD exchange rate moves over .80 or thereabouts. My last conversion from CADs to USDs occurred in August 2017: Item # 1.A. Bought USD $15,000 Using C$18,747.15 (8/31/17 Post)(the commission was included in the conversion rate of 1.2491 CAD for 1 USD) I realized that year a total currency gain of $2,152.31 currency trades including $1,917.2 from CADs to USDs and the remainder from Swiss Franc and Australian Dollars.   

Currency profits go beyond merely exchanging 1 currency for another which I last did in 2017 as described above. 

When I sell CADs to buy a security on the Toronto exchange, the result is a tax event as a U.S. taxpayer. 

All of the CADs that I own have a USD tax cost basis for tax reporting purposes. 

When I sell a foreign currency to buy a foreign stock, I will instantly create a profit or loss from selling the currency representing the difference in the USD cost basis and the USD value of the Canadian currency sold. 

That issue is not present when I use USDs to buy a Canadian stock on the NYSE since there is no currency exchange and my profit or less will be in USDs which is the only currency that I can report sales activity to the IRS.  However the CAD/USD exchange rate will still impact the price in USDs and the dividend yield.  

A. Restarted SNY  - Bought 10 at  $46.63: 

Quote: Sanofi ADR

Quote In Euros: Sanofi S.A. (France: Euronext Paris)

Cost: $467.7 (includes a $1.4 transaction tax imposed by France which is applied only to purchases)

ADR Ratio: 2 ADRs = 1 Ordinary Share

After my purchase, the stock rose in response to this news on 12/17: Duvakitug positive phase 2b results demonstrate best-in-class potential in ulcerative colitis and Crohn’s disease (12/17/24). The stock then retreated back in the rout yesterday. 

Euro to US Dollar Exchange Rate Chart | Xe

SNY Analyst Estimates

SNY SEC Filings (foreign issuer forms)

Investment Category: Mostly Dividend Harvest, capturing 1 or more annual dividend payments, selling at a profit and then waiting for another buying opportunity. Given my increased emphasis on capital preservation now, the lot sizes of purchases have been reduced from 50 to 20 shares as my maximum exposure. 

Last Elimination): Item # 2.A. Eliminated SNY - Sold 10 at $53.13 (7/1/2023 Post)(profit snapshot =  $52.41)  

Last Buy Discussions: Item # 3.G. Added 5 SNY at $46.6 (8/16/22 Post); Item # 3.A. Bought 5 SNY at $48.9 (8/10/22 Post) 

2024 Third Quarter Product Sales: 

Sourced: Press Release

The primary reason for owning SNY is the mega blockbuster drug Dupixent that increased revenues by 22.1% to €3.476B. The drug has been approved for several indications including atopic dermatitis, asthma, COPD, and chronic rhinosinusitis with nasal polyps. The company reiterated its €13B revenue estimate for 2024. 

Dupixent profits are shared with Regeneron Pharmaceuticals Inc. (REGN) as described in this excerpt: 

P. 61 Annual Report

2023 SEC Filed Annual Report 

As part of SNY's collaboration with REGN, SNY bought REGN stock, as I recall, and sold 22.8 M shares at $515 per share in 2020, keeping 400K shares according to this press release. Sanofi announces closing of Regeneron stock sale SNY recognized a gain of €7.362B. P.62, 2020 SNY SEC Filed Annual Report 

Notwithstanding the stellar performance of Dupixent for the past several years, the SNY stock price has been range bound and stagnant largely in a $45 to $55 price range for about 12 years now. 

I tend to play this long term channel, buying near the bottom and selling near the top. I would attribute the range bound movement primarily to the what are you going to do for me next problem and secondarily to the contractual obligation to share profits with Regeneron.  

Sanofi's most successful acquisition was Genzyme that was bought in 2011 for about $20.1B.  

Our Product Pipeline | Sanofi

Latest Sanofi Press Releases and News | Sanofi 

Some recent press releases: Tolebrutinib designated Breakthrough Therapy by the FDA for non-relapsing secondary progressive multiple sclerosis (12/13/24); rilzabrutinib demonstrated significant patient benefit in the first positive phase 3 study of a BTK inhibitor in ITP (12/7/24); Sarclisa recommended for EU approval by the CHMP to treat transplant-ineligible newly diagnosed multiple myeloma (11/14/24)(some indication already approved by regulators; 2024 third quarter revenues at €114M); 

Sanofi in discussions to sell a controlling stake in Opella (10/11/24)("With a portfolio of 100 leading brands, including Allegra, Doliprane, Novanight, Icy Hot, and Dulcolax, Opella is the world's third-largest company in the over the counter and vitamins, minerals, and supplements market, serving more than half a billion consumers worldwide.")

Dividend: Paid Annually, subject to France's withholding tax. 

Sanofi (SNY) Stock Dividend History & Date (ADR shares)

The dividend yield will  fluctuate with the EUR/USD exchange rate. 

I would not own this stock in my Roth IRA accounts since there is no way to recover the foreign tax.  

Last Annual Dividend: $2.0309

Yield: It is not possible to calculate a dividend yield since the amounts paid will fluctuate with the EUR/USD exchange rate. If I assume just for illustration a constant $2.03 annual dividend, the yield would be about 4.38% at a total cost of US$46.63. 

Historical Dividends for owners of USD price SNY ADR: 

Sanofi (SNY) Stock Dividend History & Date  

The annual dividend will generally go ex in May and will then be paid in June. 

Last Earnings Report (Q/E 9/30/24): SEC Filed Press Release 

International Financial Reporting Standards (IFRS) Definition European use this accounting standard rather than GAAP. 

Revenues: €13.438B

IFRS Reported E.P.S. = €$2.25

Business E.P.S. €2.86

USD ADR Business E.P.S. = €1.43 (it takes two ADRs to equal 1 ordinary share)

Reconciliation of Reported to Business E.P.S.:   

Free cash flow: €3.327B

New Drug Launches: 

Beyfortus and vaccines had better than expected revenues of €645 and €1.9B respectively. Beyfortus protects infants from respiratory syncytial virus (RSV)

Some Other Sell Discussions: Item # 2.A. Eliminated SNY - Sold 20 at $54.04 (6/1/22 Post)(profit snapshot = $116.91); Item # 2 Sold 50 SNY at $41.54 (1/18/17 Post)(profit snapshot = $130.36); Item # 6 Sold 50 SNY at $42.56- Update For Healthcare Basket Strategy As Of 8/12/16 - South Gent | Seeking Alpha (profit snapshot = $177.4); Item # 1. Sold Sanofi (6/30/2009 Post) (profit snapshot = $83.29)

At least 1 realized gain was not discussed: 

2015 SNY 50 shares +$121.93

Realized Gains SNY to Date: $682.43  

Analyst Reports (available to Schwab customers): 

Morningstar (12/2/24): 4 stars with a fair value estimate of $63 and a wide moat. The PT was raised from $61 in response to the third quarter report. 

S&P (10/28/24): 4 stars with a $62 PT

Goal: I would view this investment as a success by selling the shares at $60 and receiving at least 1 annual dividend payment. I suspect based on recent chart movements that a $60 price may require up to 3 years of waiting.  

B. Added 100 BTB.UN:CA at C$3.44: 

Quote: BTB Real Estate Investment Trust (BTB-UN.TO) - Canadian REIT

Cost: C$345 with C$1 commission. 

Management: Internal

Website: BTB REIT

Property Information as of 9/30/24:

75 properties with 6,125,735 leasable square feet. 

45.3% of total revenue is generated by leases signed with governmental agencies. 

Mortgage loans payable as of 9/30/24: $655.686M with a weighted average interest rate of 4.33% and a weighted average term of 3 years. yars. 

Last Discussed: Item # 1.A. (9/26/24 Post) I discussed the second quarter report in that post: Q2-2024_Interim Financial Statements and Report.pdf

Average cost per unit (share): C$3.51 (200 units)

Dividend: Monthly at C$.025 (C$.30 annually)

Canada will withhold 15%. 

Yield at TC of C$3.51: 8.547%

Next Ex Dividend: 12/31/24

Last Earnings Report (Q/E 9/30/24): Q3-2024_Interim-Financial-Statements and Report.pdf

All amounts are in Canadian Dollars.  

Rental Revenue: $32.505M

Adjusted FFO per unit: $.107

Adjusted AFFO per unit: $.097

FFO to AFFO Reconciliation: 

Distributions: $.075

Occupancy in place: 91.5%

One tenant, who occupied 132,655 square feet of an industrial property, declared bankruptcy. The REIT is in the process of replacing that tenant.  

C. Added to NTST - Bought 5 at $15.17; 5 at $14.9: 

Quote: NetSTREIT Corp. (NTST) - Internally Managed Retail REIT

Cost: $150.33

"The Company acquires, owns and manages commercial single-tenant lease properties, with the majority being long-term triple-net leases where the tenant is generally responsible for all improvements and contractually obligated to pay all operating costs (such as real estate taxes, utilities and repairs and maintenance costs). As of September 30, 2024, exclusive of mortgage loans receivable, the Company’s weighted average remaining lease term was 9.5 years." 10-Q for the Q/E 9/30/24 at page 11. 

Website: NETSTREIT

NTST SEC Filings

2023 SEC Filed Annual Report

Last Discussion: Item # 1.C. Added to NTST - Bought 5 at $15.7; 5 at $15.45  (12/12/24 Post) 

New Average cost per share: $15.76 (40 shares)

Dividend: Quarterly at $.21 per share 

Yield at $15.76: 5.32%

Last Ex Dividend: 12/2/24

Last Earnings Report (Q/E 9/30/24): I discussed this report here: Item # 2.A. Started NTST - Bought 10 at $16.43; 10 at $16 (12/5/24 Post)

Purchase Restrictions: 5 or 10 share lots with each subsequent purchase required to be at the lowest price in the chain with a maximum position of 100 shares.  

D. Added to WHF - Bought 5 at $10.65: 

Quote: WhiteHorse Finance Inc. (WHF) - Externally Managed BDC

Cots: $53.25 

I was not pleased with the last earnings report which is discussed below. I decided to average down in 5 share lots notwithstanding my displeasure since the dividend yield is high and is currently covered by net investment income, though I am expecting that to change even without more nonperforming loans.  

WHF SEC Filings

SEC Filed 2023 Annual Report (Risk factor summary starts at page 30 and ends at page 78)

Last Discussed: Item # 5.C. Added to WHF - Bought 5 at $11.5 (9/26/24 Post) 

New Average cost per share: $11.65 (25 shares)

Dividend: Quarterly at $.385 per share ($1.54 annually)

Yield at New AC of $11.65: 13.22%

Next Ex Dividend: 12/20/24

Last Earnings Report (Q/E 9/30/24): SEC Filed Press Release and  SEC Filed Earnings  Presentation 

Net Investment Income per share: $.394

Distributions per share: $.385

Net Asset value per share: $12.77, down from $13.45 as of 6/30/24 

The decline in NAV per share is associated with a significant increase in non-accrual loans:  

SEC Filed Earnings Presentation at p. 8

The percent on nonaccrual loans based on total cost increased to 8.9% and at 5.65% based on the claimed fair value as of 9/30/24. Those percentages are way too high. 

"The portfolio as of September 30, 2024 consisted of 129 positions across 73 companies with a weighted average effective yield of 10.6% on income-producing debt investments. The average debt investment size (excluding investments in STRS JV (as defined below)) was $5.6 million with the overall portfolio comprised of approximately 79.0% first lien secured loans, 0.8% second lien secured loans, 0.2% unsecured loans, 3.5% equity and 16.5% in investments in STRS JV. Almost all loans were variable rate investments (primarily indexed to the Secured Overnight Financing Rate) with fixed rate securities representing only 1.3% of loans at fair value."

Weighted average yield on performing loans: 13.1%

Company assessment of credit risks

10-Q at pages 83-84 

Company assessment of how interest rate changes impact NII: 

10-Q pages 89-90 

There are consequently two major adverse developments that will negatively impact net investment income and threaten the current quarterly dividend payment: (1) the increase in non-accruing loans to over 8% of total assets based on cost and (2) the decline in short term rates resulting from FED rate cuts that will lower the coupons of variable rate loans.

Summary of loans starts at page 9. 10-Q  

I took snapshot of some non-accrual loans indicated by (17) next to the name.

One lesson from this total loss in American Crafts loan (snapshot below) is that even first lien loans made by BDCs can become worthless. 

WHF has made some super priority loans to American Crafts as part of the bankruptcy process. Senior secured loans made prior to the BK are worthless. While I am not positive, I believe this company is in a Chapter 7 liquidation. 

Another potential problem is discussed in this article: WhiteHorse Finance amends loan agreement terms -  Investing.com 

Camarillo Fitness Holdings

Note FV Near Cost

American Crafts

Total Wipeout: $20.059M in principal amount

Goal: As with all BDCs, the goal is simply to earn a return in excess of the dividend payments.  

E. Added to CVE - Bought 5 at $15.2: 

Quotes: 

USDs: Cenovus Energy Inc. (CVE)

CADs: Cenovus Energy Inc. (Canada: Toronto)

Canadian Dollar to US Dollar Exchange Rate Chart | Xe

Cost: $76

Website: Cenovus Energy is an integrated Canadian oil company

Energy stocks have struggled in response to lower crude, natural gas liquid and natural gas prices. 

Product Types 2024 Third Quarter: 

Last Discussed: Item # 3.A. Added to CVE - Bought 5 at $17.32; 4 at $16.9; 4 at $15.94 (9/12/24 Post) 

New Average cost per share: $17.75 (40 shares)

Dividend: Quarterly at C$.18 per share, last raised from C$.14 effective for the 2024 second quarter payment. 

Dividends in USDs: CVE Stock Dividend History & Date

Last 4 Dividends in USDs: US$.4936 

(excludes a special dividend of US$.0992 paid in the second quarter)

Last Ex Dividend: 12/13/24 (owned all as of)

Last Earnings Report (Q/E 9/30/24):  SEC Filed Press Release 

All amounts are in Canadian dollars. Comparisons are to the 2023 third quarter: 

E.P.S. = $.42, down from $.97 

Revenues: $14.2B, down from $14.577B

Net Debt: $4.196B, down from $5.976B

Summary of Results - SEC Filing at page 5 

Purchase Restriction: I am going to buy in 10 share lots until I hit 100 shares, but each subsequent purchase must be at the lowest price in the chain.  

F. Added to BCE - Bought 2 at $25.6; 3 at $25.34; 5 at $23.89: 

Quotes: 

USDs: BCE Inc.  (BCE) 

CADs: BCE Inc  (Canada: Toronto) 

Canadian Dollar to US Dollar Exchange Rate Chart | Xe

Cost: $246.46

BCE is Canada's largest telecommunications company. Corporate Overview | BCE Inc.

BCE is a falling knife. The last 5 share purchase was made on the ex dividend date. Investors are telling the Board that the common share dividend needs to be slashed by at least 50% and the company needs to soon take that step. BCE has not covered the dividend with either earnings or free cash over the past several quarters.  

BCE Analyst Estimates | MarketWatch

BCE Investor Relations 

Last Discussed: Item # 2.A. Added to BCE - Bought 5 at $26.77 (11/27/24 Post) 

BCE SEC Filings (foreign issuer forms)

New Average cost per share: $26.28 (25 shares)

Snapshot Intraday on 12/16/24 after last add

I will buy 5 more shares and then quit.

Dividend: Quarterly at C$.9975 (C$3.99 annually)

I am expecting the dividend will be slashed. Adjusted E.P.S. was C$3.21 in 2023 and at C$3.35 in 2022. 

Last 4 Quarterly Dividends in USDs: $2.94 rounded up

BCE Inc. (BCE) Stock Dividend History & Date

Dividend Yield: Will fluctuate with the CAD/USD exchange rate. Canada will withhold a 15% tax when the stock is held in a U.S. citizens taxable account. 

If I used a US$2.94 annual payment, and no dividend cut which I am expecting soon, the yield at a US$26.28 AC per share would be about 11.19%.

Last Ex Dividend: 12/16/24 (owned 20 of 25 as of)

Last Earnings Report: I discussed this report in this post: Item # 5.A. Started BCE - Bought 5 at $27.79; 5 at $27.4 (11/14/24 Post); BCE reports third quarter 2024 results I also discussed in that post recent material news: BCE to acquire Ziply Fiber, accelerating its fibre growth strategy across North America; BCE sells its minority stake in MLSE | BCE Inc.

Part of the recent weakness in USD priced shares is due to declines in the CAD/USD exchange rate. 

G. Restarted CNQ - Bought 5 at $31.86; 5 at $30.85: 

Quotes: 

USD Priced Shares: Canadian Natural Resources Ltd.  (CNQ) 

CAD Priced Shares: Canadian Natural Resources Ltd. (Canada: Toronto) 

Cost: $313.55

CNQ  Analyst Estimates | MarketWatch As of 12/13/24, the average E.P.S. estimate for 2024 was at $2.9, at $3.44 in 2025 and at $3.75 in 2026, all in USDs.  

Website: Canadian Natural Resources

Investor Relations – Canadian Natural Resources

Recent Material News: Earlier this month, CNQ completed the acquisition of Chevron's Alberta assets, including its 20% interest in the Athabasca Oil Sands Project which brings CNQ working interest to 90%. CNQ also acquired Chevron's 70% operating working interest in the light crude oil and liquids assets in the Duvernay in Alberta. CNQ paid US$6.5B for those assets as more fully described in this press release: Chevron Canada Acquisition.pdf The acquisition was completed on 12/6/24. 

Last Elimination: Item # 1.A. Sold 10 CNQ at $55.2 (6/10/23 Post)(profit snapshot = $237.5). The sales price of $55.2 is not adjusted for a subsequent 2 for 1 split effected in June 2024.  

Last Buy Discussions (prices unadjusted for stock split): Item # 2.A. Added to CNQ in Vanguard Taxable Account - Bought 5 at $30 (9/17/21 Post); Item # 1.H. Started CNQ in Vanguard Taxable-Bought 5 at $32.9 (6/19/21)

Dividend: Quarterly at C$.5625 (C$2.25 annually), last raised from C$.525 effective for the 2025 first quarter payment. 

Yield: Since the dividend on the USD priced shares will be paid in Canadian dollars and then converted into USDs based on the then existing CAD/USD exchange rate, it is not possible to calculate a dividend yield. 

Generally, with no change in the dividend payment, the yield will go up when the CAD is gaining in value against the USD and down with the CAD loseing value which has been recently the case.

If I made the assumptions, just for illustration of how currency movements impact yield, that the CAD/USD exchange rate was at .71 and at .80 with the dividend remaining unchanged at C$2.25 annually, the dividend yield at US$31.86 total cost per share would be 5.01% and 5.65% respectively. (calculation using CAD/USD: C$2.25 annual dividend per share x. .8 = US$1.8 annual dividend per share ÷ by US$31.86 total cost per share = 5.6497%)

Last Ex Dividend: 12/13/24 (owned 5 of 10 as of)

Last Earnings Report (Q/E 9/30/24): SEC Filed Press Release 

All amounts are in Canadian Dollars. Comparisons are to the 2023 third quarter.  

Diluted E.P.S. = $1.06, unchanged

Adjusted E.P.S. = $.97, down from $1.31

Adjusted Funds Flow per share: $1.84, down from $2.13

Reported to Adjusted Earnings Reconciliation: 

There was a significant variation in non-operating items in the third quarter which was listed at -$195M in the 2024 third quarter compared to +$506M in the 2023 third quarter. The two non-operating items that impacted those quarter the most were share based compensation and unrealized gains or losses in foreign exchange.   

Realized product prices declined Y-O-Y: 

Daily Production before royalties: 

H. Added to GMAB - Bought 5 at $20.84: 

Quote: Genmab A/S ADR   (GMAB) - Danish Drug Company

Cost: $104.18

Investment Category: Lottery Ticket

GMAB analyst Estimates | MarketWatch

SEC Filings (foreign issuer forms)

Pipeline | Genmab

Our medicines | Genmab

New Average cost per share: $21.44 (15 shares)

Maximum Dollar Exposure: $500

Current Dollar Exposure: $369.01  

I have nothing further to add to my recent discussion: Item # 1.G. Started GMAB - Bought 10 at $21.74 (12/12/24 Post) 

I. Added 2 DOW at $40.75; 2 at $40.5; 2 at $40.30; 2 at $40.1: 

Quote: Dow Inc. (DOW)

Cost: $323.3

DOW SEC Filings

I will switch to 3 share purchases when and if the price sinks below $40.  

DOW is another falling knife. The general consensus, expressed in the frequent new 52 week lows, is that conditions are bad and will not get any better for a very long time. I suspect that is too pessimistic using a 1 to 3 year perspective.   

DOW  Analyst Estimates | MarketWatch

Last Discussed: Item # 1.E. Added to DOW - Bought 1 at $41.99; 2 at $41.53 (12/12/24 Post) As I mentioned in my last post, this stock is showing no signs of bottoming and is in a bear market of uncertain duration. 

New Average cost per share: $45.54  (26+ Shares)

Dividend: Quarterly at $.70 per share ($2.8 annually)

DOW Dividend History | Nasdaq

I am reinvesting the dividend as another method for averaging down. 

Yield at $45.54: 6.148%

Last Earnings Report (Q/E 9/30/24): I discussed this report here: Item #2.G. Added to DOW - Bought 2 at $48.39; 1 at $47.82 (11/7/24 Post); SEC Filed Press Release 

Last Elimination: Item # 1.B. Eliminated DOW in 2 Taxable Accounts - Sold 5 at $59.71; 8 at $60.02 (2/13/23 Post)

2. Eliminated FSMEX - Sold 20+ Shares at $68.77: 

Quote: Fidelity Select Medical Technology and Devices Portfolio 

Proceeds: $1,436.67

Last Discussed: Item # 1.H. Added $100 to FSMEX at $61.48 (7/5/24 Post) 

FSMEX Page at Morningstar (currently rated 4 stars)

FSMEX – Portfolio-Morningstar (lists top 25 holdings, available for viewing by non-subscribers) I view the P/E ratios for most of those holdings as too high and own none of the stocks listed. I do own 35 shares of Medtronic (MDT), which was not owned by the fund as of 8/31/24, the date of its last shareholder report.  

Sponsor's website: FSMEX 

Expense Ratio: .65%

Top 10 Holdings as of 11/30/24: 

Profit Snapshot: $66.86

Dividends: No ordinary dividend have been paid since an $.08 per share distribution in 2017. Many of the stocks owned by this fund pay no or insignificant dividends. 

I did sell the shares before a $4.64 capital gain distribution went ex dividend on 12/13/24. 

That dividend would have been primarily a tax event for me and would have taken me back into loss territory since the net asset value per share is reduced by the amount of the dividend. 

Based on my average cost per share, the better after tax return alternative was to eliminate the position before the ex dividend date and then to consider buying back shares when and if a buying opportunity arises, taking into account my negative opinion about current valuations of most owned stocks.  

3. Corporate Bonds: 

Most of my corporate bond purchases are currently in the 9/1/25 to 12/31/26 maturity range. I will be adding treasury bills maturing in the 6/1/25 to 9/1/25 time frame. 

The risk that short term interest rates will rise is not meaningful to me given the constant stream of redemption proceeds received from maturing T Bills, short term corporate bonds and CDs. When rates are rising, the proceeds can be redirected into higher yielding securities.  

There is an interest rate risk that short or intermediate term rates decline as I receive proceeds from maturing securities. Short term rates are controlled by the FED's federal funds range and the trend since the FED cut 50 basis points last September has been down for short term interest rates. 

Intermediate term interest rates have been trending higher, however, since the first FED rate cut in September. This may be caused by concerns that monetary stimulus and other factors may result in longer term inflationary trends to move higher.  The other factors include tariff increases increasing prices as well as resulting in supply chain shocks, mass deportations of persons that will add to supply chain problems, and tax cuts that will increase consumer demand at a time when other factors create supply shortages.  

If Trump eliminates the FDIC, I will no longer own CDs. Abolishing the FDIC could backfire on Trump and his allies Trump is ignorant IMO but has learned over his adult lift how to shamelessly and successfully manipulate people with false and misleading statements, an unfortunately easy task once perfected by a demagogue. And, if Trump actually believes that his false statements are true and acts upon them, then that has the potential for negative results since he is incapable of making judgments based on accurate information and then balancing the risks and rewards of particular policies.  

A. Bought 1 UDR 2.95% SU Maturing on 9/1/26 at a Total Cost of 97.183:  

Issuer: UDR Inc. (UDR) - Apartment REIT, a component of the S&P 500. 

I have a small ball position in the common stock that has a lower yield than the UDR bonds. 

UDR SEC Filings

Last Earnings Report (Q/E 9/30/24): SEC Filed Press Release and SEC Filed Supplemental

Last UDR Discussion: Item # 2.B. Added to UDR - Bought 5 at $41.75 (11/7/24 Post) 

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa1/BBB+

YTM at Total Cost: 4.655%

Current Yield at TC: 3.035%

I now own 4. All purchases were 1 bond lots. 

B. Bought 1 Black Hills 3.95% SU Maturing on 1/15/26 at a Total Cost of 99.278: 

Issuer: Black Hills Corp. (BKH) - Utility Holding company

I no longer have a position in the common shares, preferring to own BKH SU bonds. 

BKH SEC Filings

SEC Fiiled Earnings Press Release for the Q/E 9/30/24

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa2/BBB+

YTM at Total Cost: 4.622%

Current Yield at TC = 3.98%

I now own 10 bonds. All were 1 bond lot purchases. 

C. Bought 1 GATX 3.25% SU Bond Maturing on 9/15/26 at a Total Cost of 97.632: 

Issuer: GATX Corp. (GATX) 

I have never owned the common stock. 

GATX Analyst Estimates | MarketWatch

GATX SEC Filings 

GATX SEC Filed Earnings Press Release for the Q/E 9/30/24 

GATX 10-Q for the Q/E 9/30/24 

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa2/BBB

YTM at Total Cost: 4.665%

Current Yield at TC = 3.33%

I now own 2 bonds. 

D. Bought 1 Wells Fargo 4.1% SU Maturing on 6/3/26 at a Total Cost of 99.174: 

Issuer: Wells Fargo & Co. (WFC) 

WFC Analyst Estimates | MarketWatch

FINRA Page: Bond Page | FINRA.org

Credit Ratings: A3/BBB

YTM at Total Cost: 4.689%

Current Yield at TC = 4.134%

E. Bought 2 Dominion Energy 3.9% SU Maturing on 10/1/25 at a Total Cost of 99.45: 

Issuer: Dominion Energy (D) - Utility Holding Company and a component of the S&P 500.  

I no longer have a position in the common shares.  

D Analyst Estimates | MarketWatch

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa2/BBB

YTM at Total Cost: 4.601%

Current Yield at TC = 3.922%

I now own 6 bonds which includes 2 own in a RI account. 

F. Bought 2 Amcor Finance USA 3.625% SU Maturing on 4/28/26 at a Total Cost of 98.6: 

Issuer: Wholly owned of Amcor PLC (AMCR) who guarantees the notes. 

These notes were originally issued by Bemis, a company acquired by Amcor. The Bemis notes were exchange for notes issued by Amcor Finance. Prospectus (pages 17, 47). 

I own the common stock. At the current price, the dividend yield is higher than the AMCR bond yields. 

Last AMCR Discussion: Item # 2.G. Added to AMCR - Bought 2 at $9 (4/26/24 Post); Item # 1.B. Added to AMCR - Bought 5 at $8.95; 5 at $8.75; 5 at $8.59 (10/21/23 Post)

SEC Filed Earnings Press Release for the Q/E 9/30/24 

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa2/BBB

YTM at Total Cost: 4.685%

Current Yield at TC =  3.677%

G. Bought 2 Voya Financial 3.65% SU Maturing on 6/15/26 at a Total Cost of 98.436: 

Issuer: Voya Financial Inc. (VOYA) 

VOYA SEC Filed Earnings Press Release for the Q/E 9/30/24 

VOYA Analyst Estimates | MarketWatch

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa2/BBB+

YTM at Total Cost: 4.744%

Current Yield at TC =  3.708%

4. Treasury Bills Purchased at Auction: 

I am slowing down my treasury bill purchases for the remainder of this year. I plan to buy at least $10K at the first treasury auction in January 2025. I am light in my July bond ladder maturities. 

A. Bought 5 Treasury Bills at the 12/16/24 Auction: 

182 Day Bills

Mature on 6/20/25

Interest: $105.73

Investment Rate: 4.309%

5. Small Ball Sells: 

A. Pared FSK in Schwab Account - Sold 10 at $21.45: 

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

Proceeds: $214.44

FSK SEC Filings

10-Q for the Q/E 9/30/24 A summary of investments starts at page 5. 

2023 SEC Filed Annual Report (Summary of risk factors starts at page 17 and ends at page 43) 

Last Reported NAV per share: $23.82, down from $24.46 as of 12/31/23. 

Profit Snapshot: $18.14

New average cost per share this account: $15.72 (47+ shares)

Snapshot after pare-Price as of 12/12/24 close

The AC per share was reduced from $16.4.

Regular Dividend: Quarterly at $.64 per share ($2.56 annually)

FSK Stock Dividend History & Date

2024 Special Dividends = $.34 per share

2023 Special Dividends = $.12 per share

2022 Special Dividend =  $.13

2019-2021: None

I would attribute all or most of the special dividends to increased NII resulting from a rise in short term rates that increased the coupons of floating rate loans. Other factors may have come into play. The recent decline in short term rates will have a negative impact on NII.

Yield at $15.72 AC =  16.285% (regular dividend only) 

Last Ex Dividend: 12/4/24 (owned all as of) 

The last dividend included a $.06 special dividend bringing the total to $.70 per share. 

Last Earnings Report: (Q/E 9/30/24): I discussed this report here and have nothing further to add: Item # 1.M. Pared FSK - Sold 25 at $21.57 - Fidelity Account (11/27/24 Post)(profit snapshot  = $49.24); SEC Filed Press Release

Goal: Any return in excess of the dividend payments. 

B. Sold 6 FSK in Fidelity Account at $21.44: 

See Item # 5.B. above

Proceeds: $128.62

Profit Snapshot: +$16.58

New Average cost per share this account: $15.71 (37+ shares)

Snapshot Intraday on 12/12/24 after pare

The AC was reduced from $16.13. 

Yield at $15.71 AC:  16.3% (Regular Dividend Only)

Last Ex Dividend: 12/4/24 (owned all as of)

C. Eliminated HNNA  -Sold 25 at $13.24: 

Quote: Hennessy Advisors Inc. (HNNA) - Asset Management

Proceeds: $330.99

HNNA SEC Filings

SEC Filed Annual Report for the Fiscal Year ending 9/30/24 A description of the funds managed by Hennessey starts at page 4.

Website: Hennessy Advisors

Profit Snapshot: $166.55

Last Discussed: Item # 2.C. Bought 20 HNNA at $6.6 (11/11/23 Post)

Dividend: Quarterly at $.1375 per share ($.55 annually) 

HNNA Dividend History | Nasdaq

Last Ex Dividend: 11/14/24 (owned as of)

Last Earnings Report (9/30/24):  

SEC Filed Press Release 

12 Month E.P.S. = $.92, up from $.63 in the prior fiscal year

AUM = $4.642+B, up from $3.032+B

6. Tennessee Municipal Bonds: 

A. Bought 5 Williamson County Tennessee 3% GO Maturing on 4/1/2029 at a Total Cost of 98.006: 

Emma Page

Credit Rating: Aaa by Moody's 

I live in Williamson County, one of the richest counties in the U.S. The county seat of Franklin also has a AAA credit rating as does the city where I live which is Brentwood. 

Interest: Federally Tax Exempt

Tennessee does not have a state income tax. 

YTM at Total Cost: 3.505%

Current Yield at Total Cost:  

Optional Call: On or after 4/1/25 at par value + accrued and unpaid interest

There was only this lot for sale. I thought the individual selling it had priced it too low. The third party price that Fidelity uses was over 99. 

7. Exchange Traded Bonds: 

A. Added 5 EMP at $21.85; 5 at $21.7 - Fidelity Account: 

Quote: Entergy Mississippi LLC 4.9% First Mortgage Bond

Cost: $217.75

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

New Average cost per share this account: $22.22 (70 shares)

Snapshot Intraday 12/16/24 after second purchase

Yield at $22.22 = 5.51% 

(Calculation: .049% coupon x. $25 par value = $1.225 annual interest per share ÷ $22.22 average cost per share = 5.5131%)

Prospectus

Par Value: $25

Next Ex Interest Date: 12/31/23

Maturity: 10/1/2066, with no call protection. 

Interest paid quarterly. 

Trades Flat. 

I discussed this first mortgage baby bond in my last post: Item # 5.A. Bought 5 EMP in Schwab Account at $22.1 (12/12/24 Post) 

8. Equity Preferred Stock: 

A. Eliminated VLYPP - Sold 10 at $24.95: 

Quote: Valley National Bancorp 6.25% Preferred Series A (VLYPP) 

Proceeds: $249.49 

Issuer: Valley National Bancorp (VLY) - A Bank Holding Company

VLY SEC Filings

Profit Snapshot = $86.35

Last Discussed: Item # 1.C. Bought 10 VLYPP at $16.31 (6/3/23 Post) 

This is a fixed-to-floating rate preferred stock. 

The fixed coupon of 6.25% is the applicable one to but excluding 6/30/25. If not redeemed, the floating rate will be at a 3.85% spread to the 3 month Libor rate or the alternate rate if no Libor quotes are available (page S-19)

Prospectus

Par Value: $25

Dividend: Paid quarterly, qualified and non-cumulative. 

Maturity: Potential Perpetual

Issuer Optional Call: on or after 6/30/25 on a dividend payment date. 

Stopper Clause: Standard (pages S-19, S-20)

The Libor rate is no longer in existence. The alternate rate will probably be the 3 month SOFR + the tenor spread of .26161%. Short term rates are declining due to FED rate cuts making this preferred stock less appealing at its current price near par value. 

As a reminder, the downside risk of an equity preferred stock issued by a bank holding company is zero when and if the FDIC seizes its operating bank. 

I still own 2 Valley National 4.55% junior bonds maturing on 6/30/25. tem # 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

The downside risk of a junior bond issued by a bank holding company is the same as an equity preferred stock.  

I have eliminated my common stock position. 

Last VLY Elimination: Item # 2.E. Eliminated VLY - Sold 20 at $9.09 (10/31/24 Post)(profit snapshot = $46.91)-Item # 1.F. Restarted VLY - Bought 20 at $6.74 (6/7/24 Post)

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.