Economy:
The New York FED's economic model is now predicting a 2.48% increase in GDP for the current quarter and 2.1% for the 2019 first quarter. Nowcasting Report - FEDERAL RESERVE BANK of NEW YORK
China imports zero U.S. soybeans in November for first time since trade war started | Reuters Soybean prices are currently near the lows hit during the Near Depression. Soybean Prices - 45 Year Historical Chart | MacroTrends
Trump tariffs would make a 'steel slat' border wall much more costly
It is important to keep the current Federal Funds rate in historical perspective:
The current FF range will not have any negative impact on economy. The FED has only moved the rate up to historically abnormal levels. The current level is still extremely low given the current U.S. unemployment rate and GDP growth.
And, interest rates from two to thirty years have declined over the past three months. 2018 Daily Treasury Yield Curve Rates The ten year treasury yield, for example, was at 3.23% on 10/5/18 and closed at 2.74% last Monday.
The market is not declining based on interest rates, but on a reset in earnings expectations that investors now believe were too high. That is partly due to the Stock Jocks going from pricing no recession risk over the next 18 months to a meaningful risk of a recession.
Donald will blame anyone other than himself for the stock market's slide.
Chairman Powell has just become a convenient whipping boy for Demagogue Don:
It is my opinion that Donald is the one who is ignorant and unwilling to learn.
While the Trumpsters believe that Don the Con is competent and a "Stable Genius", I believe that a growing number of investors are viewing him for what he is, an incompetent, impulsive, delusional, belligerent, mean spirited and ignorant leader who knows no boundaries in creating chaos.
That realization hit a crescendo over the past week IMO, since it was no longer possible to pretend, except for the brain dead, that Donald was anything other than what he is. I believe the market would do better or at least stabilize if Donald just shut up rather than reminding everyone daily that he is an incompetent, impulsive, ignorant and lying demagogue.
+++++
It is important to keep the current Federal Funds rate in historical perspective:
The current FF range will not have any negative impact on economy. The FED has only moved the rate up to historically abnormal levels. The current level is still extremely low given the current U.S. unemployment rate and GDP growth.
And, interest rates from two to thirty years have declined over the past three months. 2018 Daily Treasury Yield Curve Rates The ten year treasury yield, for example, was at 3.23% on 10/5/18 and closed at 2.74% last Monday.
The market is not declining based on interest rates, but on a reset in earnings expectations that investors now believe were too high. That is partly due to the Stock Jocks going from pricing no recession risk over the next 18 months to a meaningful risk of a recession.
Donald will blame anyone other than himself for the stock market's slide.
Chairman Powell has just become a convenient whipping boy for Demagogue Don:
While the Trumpsters believe that Don the Con is competent and a "Stable Genius", I believe that a growing number of investors are viewing him for what he is, an incompetent, impulsive, delusional, belligerent, mean spirited and ignorant leader who knows no boundaries in creating chaos.
That realization hit a crescendo over the past week IMO, since it was no longer possible to pretend, except for the brain dead, that Donald was anything other than what he is. I believe the market would do better or at least stabilize if Donald just shut up rather than reminding everyone daily that he is an incompetent, impulsive, ignorant and lying demagogue.
+++++
Markets and Market Commentary:
The S & P 500 joined the Nasdaq Composite and Russell 2000 in bear market territory with last Monday's close at 2,351.1. That is 20% below its recent 52 week high of 2,940.91.
S&P 500 Enters Bear Market-Worst Christmas Eve Decline in U.S. History
The DJIA closed last Monday at 21,792.2, down 19.41% from its recent 52 week high at 26,951.81.
I would just call it a bear stock market, hopefully a cyclical one that corrects excesses of the run up since the 2016 election before resuming an uptrend.
The two year treasury note closed at a 2.557% last Monday. The 200 day SMA line is at a 2.62% yield. U.S. 2 Year Treasury Note Interactive Chart I am not interested in buying that note at auction at less than a 2.8% yield.
This is noteworthy. David Tepper is buying stocks after market's worst week in a decade
Without actually totalling up the numbers, recent common stock and stock fund buying has probably increased my stock allocation by 1%.
‘Robin Hood of Wall Street’ says be wary of Trump’s advice to buy stock-market dip - MarketWatch
The technical bounce that’s ready to drive the S&P 500 back to 2,700 - MarketWatch
The S & P 500 joined the Nasdaq Composite and Russell 2000 in bear market territory with last Monday's close at 2,351.1. That is 20% below its recent 52 week high of 2,940.91.
S&P 500 Enters Bear Market-Worst Christmas Eve Decline in U.S. History
The DJIA closed last Monday at 21,792.2, down 19.41% from its recent 52 week high at 26,951.81.
I would just call it a bear stock market, hopefully a cyclical one that corrects excesses of the run up since the 2016 election before resuming an uptrend.
The two year treasury note closed at a 2.557% last Monday. The 200 day SMA line is at a 2.62% yield. U.S. 2 Year Treasury Note Interactive Chart I am not interested in buying that note at auction at less than a 2.8% yield.
This is noteworthy. David Tepper is buying stocks after market's worst week in a decade
Without actually totalling up the numbers, recent common stock and stock fund buying has probably increased my stock allocation by 1%.
‘Robin Hood of Wall Street’ says be wary of Trump’s advice to buy stock-market dip - MarketWatch
The technical bounce that’s ready to drive the S&P 500 back to 2,700 - MarketWatch
Bridgewater's Jensen forecasts 'near-recession-level growth' in 2019 | Reuters; World’s biggest hedge fund says stocks aren’t pricing in ‘near-recession’ U.S. growth next year - MarketWatch I disagree with that assertion as a too broad over statement. There are sectors in the market that have priced a garden variety recession within 12 months. Regional bank and small cap stocks are two examples. Those sectors could continue to decline in price since bear markets frequently overshoot to the downside. Those sectors, which are already in bear markets with greater than 20% declines, could go lower based on fundamental factors, rather than internal dynamics of the market and investor behavior, with a deeper and/or longer lasting than normal recession. They would implode again in price with a Near Depression or another Great Depression.
Buckle up: PNC's Jeff Mills sees another scary market ride in 2019
Investing: Global bear market just starting, worst to come in 2019
Buckle up: PNC's Jeff Mills sees another scary market ride in 2019
Investing: Global bear market just starting, worst to come in 2019
++++
Trump:
President Trump has made 7,546 false or misleading claims over 700 days - The Washington Post (12/21/2018) I really had no idea that any human could publicly lie so much. Yet 69% of republicans view Donald as honest.
National (US) Poll - September 10, 2018 - U.S. Voters Believe Anonymous | Quinnipiac University Connecticut
Russian Efforts to Install Trump as President:
On a bipartisan basis, the Senate Intelligence Committee employed independent research firms to examine the data relating to Russian interference in the 2016 election.
Those researchers found that the Russians were actively involved in helping Donald defeat his republican challengers in the primaries and to defeat Hillary in the general election.
One conclusion was that Russia attempted to suppress turnout from African American and Bernie Sanders voters.
"The voter suppression effort was focused particularly on Sanders supporters and African-Americans, urging them to shun Mrs. Clinton in the general election and either vote for Ms. Stein or stay home."
Russian Effort to Influence 2016 Election Targeted African-Americans - The New York Times republished by MSN at Russian Effort to Influence 2016 Election Targeted African-Americans
“What is clear is that all of the messaging clearly sought to benefit the Republican Party — and specifically Donald Trump,” the report says. “Trump is mentioned most in campaigns targeting conservatives and right-wing voters, where the messaging encouraged these groups to support his campaign. The main groups that could challenge Trump were then provided messaging that sought to confuse, distract and ultimately discourage members from voting.”
Trump has admitted targeting African Americans in order to suppress their support for Hillary. Russia’s Voter Suppression Operation Echoed Trump Campaign Tactics - Bloomberg
New report on Russian disinformation, prepared for the Senate, shows the operation’s scale and sweep - The Washington Post
Russian disinformation teams targeted Robert S. Mueller III, says report prepared for Senate
Trump of course targets Mueller in his own false information campaign.
++++++
Donald hires only the best people according to no less an authority than Donald himself.
After being rebuked as an incompetent President by the outgoing Defense Secretary Jim Mattis, Donald installed two months early Patrick Shanahan as the acting Defense Secretary.
Mr. Shanahan has no military experience and almost no experience with foreign policy. He was a former Boeing executive who reached the Senior Vice President level after 30 years with that company.
Rather than leading, Trump will be throwing red meat to the reactionaries for as long as he is President. ‘This is tyranny of talk radio hosts, right?’: Limbaugh and Coulter blamed for Trump’s shutdown
Giuliani stumbles into admitting Trump’s hush money payments were probably illegal
GOP State Senator and former Co-Chairman's of Trump's Campaign in Georgia, who drove 'deportation bus' to sanctuary cities, has been indicted on insurance fraud charges
+++++++
President Trump has made 7,546 false or misleading claims over 700 days - The Washington Post (12/21/2018) I really had no idea that any human could publicly lie so much. Yet 69% of republicans view Donald as honest.
National (US) Poll - September 10, 2018 - U.S. Voters Believe Anonymous | Quinnipiac University Connecticut
Russian Efforts to Install Trump as President:
On a bipartisan basis, the Senate Intelligence Committee employed independent research firms to examine the data relating to Russian interference in the 2016 election.
Those researchers found that the Russians were actively involved in helping Donald defeat his republican challengers in the primaries and to defeat Hillary in the general election.
One conclusion was that Russia attempted to suppress turnout from African American and Bernie Sanders voters.
"The voter suppression effort was focused particularly on Sanders supporters and African-Americans, urging them to shun Mrs. Clinton in the general election and either vote for Ms. Stein or stay home."
Russian Effort to Influence 2016 Election Targeted African-Americans - The New York Times republished by MSN at Russian Effort to Influence 2016 Election Targeted African-Americans
“What is clear is that all of the messaging clearly sought to benefit the Republican Party — and specifically Donald Trump,” the report says. “Trump is mentioned most in campaigns targeting conservatives and right-wing voters, where the messaging encouraged these groups to support his campaign. The main groups that could challenge Trump were then provided messaging that sought to confuse, distract and ultimately discourage members from voting.”
Trump has admitted targeting African Americans in order to suppress their support for Hillary. Russia’s Voter Suppression Operation Echoed Trump Campaign Tactics - Bloomberg
New report on Russian disinformation, prepared for the Senate, shows the operation’s scale and sweep - The Washington Post
Russian disinformation teams targeted Robert S. Mueller III, says report prepared for Senate
Trump of course targets Mueller in his own false information campaign.
++++++
Donald hires only the best people according to no less an authority than Donald himself.
After being rebuked as an incompetent President by the outgoing Defense Secretary Jim Mattis, Donald installed two months early Patrick Shanahan as the acting Defense Secretary.
Mr. Shanahan has no military experience and almost no experience with foreign policy. He was a former Boeing executive who reached the Senior Vice President level after 30 years with that company.
Rather than leading, Trump will be throwing red meat to the reactionaries for as long as he is President. ‘This is tyranny of talk radio hosts, right?’: Limbaugh and Coulter blamed for Trump’s shutdown
Giuliani stumbles into admitting Trump’s hush money payments were probably illegal
GOP State Senator and former Co-Chairman's of Trump's Campaign in Georgia, who drove 'deportation bus' to sanctuary cities, has been indicted on insurance fraud charges
+++++++
1. Equity REIT Common and Preferred Stock Basket Strategy:
A. Bought 50 HTPRD at $20.11-In a Roth IRA Account:
Quote: Hersha Hospitality Trust 6.5% Cumulative Preferred Series D Stock
Closing Price Last Monday: HT-PD $20.20 -$0.15 -0.74%
A. Bought 50 HTPRD at $20.11-In a Roth IRA Account:
Quote: Hersha Hospitality Trust 6.5% Cumulative Preferred Series D Stock
Closing Price Last Monday: HT-PD $20.20 -$0.15 -0.74%
I discussed this purchase in a previous comment.
Last Discussions:
Item # 1.A. Bought 50 HTPRD at $22.3-Used Schwab Commission Free Trade and Item # 1.B. Bought 50 HTPRD at $21.34-In a Roth IRA Account (11/11/18 Post)
Security Description:
B, Bought 30 AHTPRI at $21.86-Used Commission Free Trade:
QUOTE: Ashford Hospitality Trust 7.5% Preferred Series I
Closing Price Last Friday: AHT-PI $19.30 -$0.79 -3.93%
Last Discussed: Item # 2.A Bought 50 AHTPRI at $23.69-Used Schwab Commission Free Trade (6/21/18 Post)
In that post, I stated that an additional purchase was unlikely given the heightened credit risk of this issuer.
The yield become sufficiently tempting that I went ahead and bought 30 more shares. I may add another 20 shares, using a commission free trade, when and if the price sinks below $20. I will likely sell the 50 share lot bought at a total cost of $23.69 for whatever profit may exist hereafter.
I view this REIT as excessively leveraged given the cyclicality of the hotel business. AHT is externally managed by Ashford Inc. See, 2017 Annual Report at pages 18-21 regarding conflicts of interest
Current Position: 80 Shares (two accounts)
Maximum Position: 100 Shares (one more 20 share purchase using a commission free trade allowed)
Security Description:
Issuer: Ashford Hospitality Trust Inc (AHT)-A HOTEL REIT
Prospectus
Par Value: $25
Optional Call by Issuer: At par value plus accrued and unpaid dividends on or after 11/17/22
Capital Structure: Senior only to common stock
Stopper Clause: Yes (enforces preferred shareholders superior claim to cash vs. common shareholders only)
Dividends: Quarterly, Cumulative and Non-Qualified (pass through entity)
Dividend Yield at TC of $21.86 (TC 30 share buy) = 8.58%
Next Ex Dividend Date: 12/28/18
Last Earnings Report: 9/30/18
Ashford Reports Third Quarter Results
10-Q for Q/E 9/30/18 (note the debt listed starting at page 20; debt at $3.894+B; list of hotels starting at page 58)
CEO Douglas Kessler on Q3 2018 Results - Earnings Call Transcript | Seeking Alpha
Hotel REITs are considered to be economically sensitive, more so than other REIT sectors other than possibly REITs that own office buildings in secondary markets with low barriers to entry.
C. Sold 10 IRM at $33.91-Used Commission Free Trade:
Quote: Iron Mountain Inc. (IRM)
Closing Price Last Monday: IRM $30.64 -$1.49 -4.64%
Profit Snapshot: $12.24
I sold my highest cost lot purchased at $32.69: Item 2.C. Bought 10 IRM at $32.69 and 10 at $31.95-Used Commission Free Trades (3/19/18 Post)
I recently bought two 5 share lots at $30.65 and $30.3. Item # 3.B (11/4/18 Post)(last quarterly report discussed in that post)
Current Position: 25+ shares
Average Cost Per Share: $31.21
Maximum Position: 100 shares
Purchase Restriction: Small Ball Rule (the lowest price paid in the chain is currently at $30.3) The next purchase would be buy back the 10 share lot sold at $33.91 somewhere between $29.5 and $30.
Dividend: Quarterly at $.611 per share or $2.444 annually (Raised 4% and announced in 2018 third quarter report)
Last Ex Dividend Date: 12/14/18
Dividend Yield at TC: 7.83%
Trading Profits to Date: $412.4
Last Sell Discussions:
Item # 3 Sold 50 IRM at $33.82-Update For Equity REIT Basket Strategy As Of 4/6/16 - South Gent | Seeking Alpha (profit snapshot= +$398.06)-Item # 3. Bought 50 IRM at $25.7: Update For Equity REIT Basket Strategy As Of 1/11/16 - South Gent | Seeking Alpha
The following trade was made before IRM became a REIT: Item # 2 Bought 50 IRM at $21.76 (9/29/2010 Post)(sold 10/20/2010 after earnings warning with a +$2.1 realized gain):
Item # 1.A. Bought 50 HTPRD at $22.3-Used Schwab Commission Free Trade and Item # 1.B. Bought 50 HTPRD at $21.34-In a Roth IRA Account (11/11/18 Post)
Category: REIT Equity Preferred-Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks
Issuer Website: Hersha Hospitality Trust
Last Issuer Earnings Release: Q/E 9/30/18
Hersha Hospitality Trust Announces Third Quarter 2018 Results
Hersha Hospitality Trust Announces Third Quarter 2018 Results
Security Description:
Cumulative Dividends: Yes
Stopper Clause: Yes
Stopper Clause: Yes
Dividends: Paid Quarterly
Last Ex Dividend Date: 9/28/18
Next Ex Dividend Date: 12/28/18
Next Ex Dividend Date: 12/28/18
Maturity Date: Potentially perpetual subject to issuer's call right
Qualified Dividends: No, pass through entity; Hersha Hospitality Trust Announces Dividend Classification for 2017
Average Cost Per Share Roth IRA Account: $20.865
Dividend Yield at TC Cost Per Share This Account: 7.79%
Average Cost Per Share Roth IRA Account: $20.865
Dividend Yield at TC Cost Per Share This Account: 7.79%
B, Bought 30 AHTPRI at $21.86-Used Commission Free Trade:
QUOTE: Ashford Hospitality Trust 7.5% Preferred Series I
Closing Price Last Friday: AHT-PI $19.30 -$0.79 -3.93%
Last Discussed: Item # 2.A Bought 50 AHTPRI at $23.69-Used Schwab Commission Free Trade (6/21/18 Post)
In that post, I stated that an additional purchase was unlikely given the heightened credit risk of this issuer.
The yield become sufficiently tempting that I went ahead and bought 30 more shares. I may add another 20 shares, using a commission free trade, when and if the price sinks below $20. I will likely sell the 50 share lot bought at a total cost of $23.69 for whatever profit may exist hereafter.
I view this REIT as excessively leveraged given the cyclicality of the hotel business. AHT is externally managed by Ashford Inc. See, 2017 Annual Report at pages 18-21 regarding conflicts of interest
Current Position: 80 Shares (two accounts)
Maximum Position: 100 Shares (one more 20 share purchase using a commission free trade allowed)
Security Description:
Issuer: Ashford Hospitality Trust Inc (AHT)-A HOTEL REIT
Prospectus
Par Value: $25
Optional Call by Issuer: At par value plus accrued and unpaid dividends on or after 11/17/22
Capital Structure: Senior only to common stock
Stopper Clause: Yes (enforces preferred shareholders superior claim to cash vs. common shareholders only)
Dividends: Quarterly, Cumulative and Non-Qualified (pass through entity)
Dividend Yield at TC of $21.86 (TC 30 share buy) = 8.58%
Next Ex Dividend Date: 12/28/18
Last Earnings Report: 9/30/18
Ashford Reports Third Quarter Results
10-Q for Q/E 9/30/18 (note the debt listed starting at page 20; debt at $3.894+B; list of hotels starting at page 58)
CEO Douglas Kessler on Q3 2018 Results - Earnings Call Transcript | Seeking Alpha
Hotel REITs are considered to be economically sensitive, more so than other REIT sectors other than possibly REITs that own office buildings in secondary markets with low barriers to entry.
C. Sold 10 IRM at $33.91-Used Commission Free Trade:
Quote: Iron Mountain Inc. (IRM)
Closing Price Last Monday: IRM $30.64 -$1.49 -4.64%
Profit Snapshot: $12.24
I sold my highest cost lot purchased at $32.69: Item 2.C. Bought 10 IRM at $32.69 and 10 at $31.95-Used Commission Free Trades (3/19/18 Post)
I recently bought two 5 share lots at $30.65 and $30.3. Item # 3.B (11/4/18 Post)(last quarterly report discussed in that post)
Current Position: 25+ shares
Average Cost Per Share: $31.21
Maximum Position: 100 shares
Purchase Restriction: Small Ball Rule (the lowest price paid in the chain is currently at $30.3) The next purchase would be buy back the 10 share lot sold at $33.91 somewhere between $29.5 and $30.
Dividend: Quarterly at $.611 per share or $2.444 annually (Raised 4% and announced in 2018 third quarter report)
Last Ex Dividend Date: 12/14/18
Dividend Yield at TC: 7.83%
Trading Profits to Date: $412.4
Last Sell Discussions:
Item # 3 Sold 50 IRM at $33.82-Update For Equity REIT Basket Strategy As Of 4/6/16 - South Gent | Seeking Alpha (profit snapshot= +$398.06)-Item # 3. Bought 50 IRM at $25.7: Update For Equity REIT Basket Strategy As Of 1/11/16 - South Gent | Seeking Alpha
The following trade was made before IRM became a REIT: Item # 2 Bought 50 IRM at $21.76 (9/29/2010 Post)(sold 10/20/2010 after earnings warning with a +$2.1 realized gain):
2. Short Term Bond/CD Ladder Basket Strategy:
Purchases:$5K
Most of the dollars for purchases continue to flow into high quality short term bonds and CDs.
A. Bought 3 Treasury Bill (6 months at auction) Maturing on 6/13/19:
IR= 2.546%
Interest = $37.61
Treasury Bills, defined as maturities of 1 year or less, are auctioned without coupons. The interest is the difference between par value and the price paid at the auction. In this case, par value is $1,000 per bond. I bought 3 bonds for $2,962.39 and will receive $3,000 on 6/13/19. The difference is $37.61 which will be classified as interest income.
Auction Results:
B. Bought 2 CVS 2.25% SU Maturing on 8/12/19:
I now own 4 bonds.
FINRA Page: Bond Detail (prospectus linked)
Issuer: CVS Health Corp. (CVS)
CVS Analyst Estimates
CVS Health Completes Acquisition of Aetna, Marking Start of Transforming Consumer Health Experience (10/28/18)("Under the terms of the transaction, each outstanding share of Aetna common stock is being exchanged for $145.00 in cash and 0.8378 shares of CVS Health common stock").
Judge softens his stance that CVS may have to halt Aetna integration - MarketWatch
Credit Ratings:
The debt increase resulting from the Aetna acquisition caused Moody's to downgrade the debt from BBB+. Rating Action I do not regard that action to be relevant for this short term bond.
Bought at a Total Cost of 99.6
YTN at TC Then at 2.857%
Current Yield at TC = 2.259%
For a bond with only one more semi-annual payment before maturity and the final interest payment, I do not view the current yield as important. I will receive a semi-annual payment in February and will recoup then the accrued interest of $15 paid to the seller plus an additional 64 days or so of interest. The final semi-annual payment will occur on 8/12/19.
I used the $2K received on 12/10 from this maturing CD to fund this CVS bond purchase:
At the time of purchase, the YTM on a treasury treasury maturing on 8/15/19 for a 2 bond purchase was 2.577%:
3. Long Term Bond Basket Strategy-Potentially Long Duration Senior Unsecured Baby Bonds:
Most of the dollars for purchases continue to flow into high quality short term bonds and CDs.
A. Bought 3 Treasury Bill (6 months at auction) Maturing on 6/13/19:
IR= 2.546%
Interest = $37.61
Treasury Bills, defined as maturities of 1 year or less, are auctioned without coupons. The interest is the difference between par value and the price paid at the auction. In this case, par value is $1,000 per bond. I bought 3 bonds for $2,962.39 and will receive $3,000 on 6/13/19. The difference is $37.61 which will be classified as interest income.
Auction Results:
B. Bought 2 CVS 2.25% SU Maturing on 8/12/19:
I now own 4 bonds.
FINRA Page: Bond Detail (prospectus linked)
Issuer: CVS Health Corp. (CVS)
CVS Analyst Estimates
CVS Health Completes Acquisition of Aetna, Marking Start of Transforming Consumer Health Experience (10/28/18)("Under the terms of the transaction, each outstanding share of Aetna common stock is being exchanged for $145.00 in cash and 0.8378 shares of CVS Health common stock").
Judge softens his stance that CVS may have to halt Aetna integration - MarketWatch
Credit Ratings:
The debt increase resulting from the Aetna acquisition caused Moody's to downgrade the debt from BBB+. Rating Action I do not regard that action to be relevant for this short term bond.
Bought at a Total Cost of 99.6
YTN at TC Then at 2.857%
Current Yield at TC = 2.259%
For a bond with only one more semi-annual payment before maturity and the final interest payment, I do not view the current yield as important. I will receive a semi-annual payment in February and will recoup then the accrued interest of $15 paid to the seller plus an additional 64 days or so of interest. The final semi-annual payment will occur on 8/12/19.
I used the $2K received on 12/10 from this maturing CD to fund this CVS bond purchase:
 |
| 15 month Pacific Premier Bank 1.45% CD (monthly interest) |
 |
| Current Yield for 2 Bonds = .7593%/YTM Higher Due to the Discount to Par |
A. Bought 70 ARGD at $24.93:
Quote: Argo Group International Holdings Ltd. 6.5% Senior Notes Due 2042 (ARGD)
Closing Price Last Monday: ARGD $24.85 +$0.02 +0.08%
Closing Price Last Monday: ARGD $24.85 +$0.02 +0.08%
Category: Exchange Traded Baby Bonds
I now own 100 shares in this account and 50 shares in a Roth IRA.
My previous buy in this account was discussed here: Item # 1.A. Bought 30 ARGD at $25.33-Used Commission Free Trade (7/25/18 Post)
I bought this lot on the quarterly ex interest date which allowed me to buy at price lower than the $25 par value.
Security Description: Final Prospectus Supplement
Issuer: Argo Group U.S.
Guarantor: Argo Group International Holdings Ltd. (ARGO)
ARGO Analyst Estimates
ARGO SEC Filings
ARGO 2017 Annual Report (risk discussion starts at page 14; bond discussion starts at page F-45
Last ARGO Earnings Report: Q/E 9/30/18
2017 ARGO Annual Report
Capital Structure Placement: Senior Unsecured Bond
Interest Payments: Quarterly at $.40625 per share (.065% x. $25= $1.625 annually)
Trades: Flat (whoever owns the security on the ex interest date receives the entire interest payment with no accrued interest paid to the bond seller)
Average Total Cost = $25.1
Yield at $25.1 (assuming no call): 6.474%
Par Value: $25
Optional Call Date: At par value plus accrued and unpaid interest whenever issuer chooses
Maturity: Unless redeemed early at issuer's option, the bond matures on 9/15/42;
Interest Rate Risk: Asymmetric in favor of issuer
Bond Rating: According to Quantumonline, the bond has a BBB- rating from S & P.
Last Ex Interest Date: 11/29/18
Current Position: 150 Shares
Maximum Position: 150 Shares
Last Round-Trips (prior symbol was AGIIL):
Item # 4 Sold 100 AGIIL (9/25/17 Post)(profit snapshots = $30.09)-South Gent's Comment Blog # 8: Bought 50 AGIIL at $24.98 (bought back 50 shares sold at $26.69 in May 2016) and Item # 5. Bought 50 AGIIL at $24.6 in IB Account-Update For Exchange Traded Bonds And Preferred Stock Basket Strategy As Of 1/22/16 - South Gent | Seeking Alpha
Issuer: Argo Group U.S.
Guarantor: Argo Group International Holdings Ltd. (ARGO)
ARGO Analyst Estimates
ARGO SEC Filings
ARGO 2017 Annual Report (risk discussion starts at page 14; bond discussion starts at page F-45
Last ARGO Earnings Report: Q/E 9/30/18
2017 ARGO Annual Report
Capital Structure Placement: Senior Unsecured Bond
Interest Payments: Quarterly at $.40625 per share (.065% x. $25= $1.625 annually)
Trades: Flat (whoever owns the security on the ex interest date receives the entire interest payment with no accrued interest paid to the bond seller)
Average Total Cost = $25.1
Yield at $25.1 (assuming no call): 6.474%
Par Value: $25
Optional Call Date: At par value plus accrued and unpaid interest whenever issuer chooses
Maturity: Unless redeemed early at issuer's option, the bond matures on 9/15/42;
Interest Rate Risk: Asymmetric in favor of issuer
Bond Rating: According to Quantumonline, the bond has a BBB- rating from S & P.
Last Ex Interest Date: 11/29/18
Current Position: 150 Shares
Maximum Position: 150 Shares
Last Round-Trips (prior symbol was AGIIL):
Item # 4 Sold 100 AGIIL (9/25/17 Post)(profit snapshots = $30.09)-South Gent's Comment Blog # 8: Bought 50 AGIIL at $24.98 (bought back 50 shares sold at $26.69 in May 2016) and Item # 5. Bought 50 AGIIL at $24.6 in IB Account-Update For Exchange Traded Bonds And Preferred Stock Basket Strategy As Of 1/22/16 - South Gent | Seeking Alpha
During that 2013 price plunge, I did buy some shares. Item # 6 Bought 50 AGIIL at $20.2 (December 2013 Post) I sold that lot at $24.21: Item # 2 Sold 50 AGIIL at $24.21-Roth IRA (6/28/14 Post)(profit snapshot=$186.48 plus two quarterly interest payments totaling $40.62; total return 22.33% in about 6 months)
Another 50 share lot was bought in October 2013: Item # 3 Bought: 50 AGIIL at $21.11 (10/13/2013 Post). I sold the lot bought in October 2013 at $24.48: Item # 2 Sold: 50 AGIIL at $24.48 (6/7/14 Post)(profit snapshot=$152.58; total return of $193.2 or 18.17% in about 7 months).
Trading Profits to Date = $369.15
I do not anticipate generating a profit on my 100 shares held in this taxable account.
The general idea is to be content with a 6.47+% income distribution for as long as it lasts.
If the bond is called at par value, I will lose about $10 on the security.
It is possible that I may be able to sell the 100 share lot profitably after collecting several interest payments.
For awhile now, this security has trended up in price over its $25 par value as the time period shortens to the next quarterly ex interest date. This may continue to occur unless there is a meaningful upward spike in longer term interest rates.
If there is a meaningful decline in interest rates, the issuer may be tempted to call.
Trading Profits to Date = $369.15
I do not anticipate generating a profit on my 100 shares held in this taxable account.
The general idea is to be content with a 6.47+% income distribution for as long as it lasts.
If the bond is called at par value, I will lose about $10 on the security.
It is possible that I may be able to sell the 100 share lot profitably after collecting several interest payments.
For awhile now, this security has trended up in price over its $25 par value as the time period shortens to the next quarterly ex interest date. This may continue to occur unless there is a meaningful upward spike in longer term interest rates.
If there is a meaningful decline in interest rates, the issuer may be tempted to call.
4. Eliminations:
A. Sold 50+ AGNC at $17.83+:
Closing Price Last Monday: AGNC $17.24 -$0.21 -1.20%
Quote: AGNC Investment Corp.
Profit Snapshot: +$5.46 (will receive one more monthly dividend in cash)
Item 1.B. Bought Back 50 AGNC at $17.63-Used Commission Free Trade (11/14/18 Post)
I am going to quit while I am ahead on this MREIT. I discussed the reasons in the perviously linked post.
AGNC Realized Gains To Date: $389.9 ($384.44 prior transactions)
AGNC Investment Corp. Declares Monthly Common Stock Dividend of $0.18 per Common Share for November 2018 and Announces Estimated Tangible Net Book Value of $16.94 per Common Share as of October 31, 2018
Subsequent to my disposition, AGNC announced its $.18 per share monthly dividend and a tentative net asset value per share of $16.76 as of 11/30/18: AGNC Investment Corp. Declares Monthly Common Stock Dividend of $0.18 per Common Share for December 2018 and Announces Estimated Tangible Net Book Value of $16.76 per Common Share as of November 30, 2018
I have been fortunate so far in harvesting dividends and adding to my total returns through profitable trading. I do not want to push my luck any further.
I did note, however, that JPM upgraded AGNC Investment to overweight from neutral on 12/20/18. The price target was increased to $18 from $17.5. I do not have a copy of that analyst report.
5. Intermediate Term Bond/CD Ladder Basket Strategy:
A. Bought 1 Boston Properties L.P. 3.125% SU Maturing on 9/1/23-In a Roth IRA Account:
I now own 3 bonds with 2 owned in this Roth IRA account.
FINRA Page: Bond Detail (prospectus linked)
Issuer: Operating Entity for Boston Properties Inc. (BXP who guarantees the notes.
Boston Properties Announces Third Quarter 2018 Results of $0.77 GAAP EPS and $1.64 FFO Per Share
BXP 2017 Annual Report (debt listed starting at page 154; note there is a 3.85% SU note maturing earlier in 2013)
Recent Bond Issue: Boston Properties Prices $1.0 Billion Offering of 4,5% SU Green Bonds Maturing in 2028 (11/13/18)
Bought at a Total Cost of 96.7 (with $2 Vanguard Commission)
YTM at TC Then at 3.896%
Current Yield at TC = 3.2316% (tax free in the Roth IRA)
A. Sold 50+ AGNC at $17.83+:
Closing Price Last Monday: AGNC $17.24 -$0.21 -1.20%
Quote: AGNC Investment Corp.
Profit Snapshot: +$5.46 (will receive one more monthly dividend in cash)
Item 1.B. Bought Back 50 AGNC at $17.63-Used Commission Free Trade (11/14/18 Post)
I am going to quit while I am ahead on this MREIT. I discussed the reasons in the perviously linked post.
AGNC Realized Gains To Date: $389.9 ($384.44 prior transactions)
AGNC Investment Corp. Declares Monthly Common Stock Dividend of $0.18 per Common Share for November 2018 and Announces Estimated Tangible Net Book Value of $16.94 per Common Share as of October 31, 2018
Subsequent to my disposition, AGNC announced its $.18 per share monthly dividend and a tentative net asset value per share of $16.76 as of 11/30/18: AGNC Investment Corp. Declares Monthly Common Stock Dividend of $0.18 per Common Share for December 2018 and Announces Estimated Tangible Net Book Value of $16.76 per Common Share as of November 30, 2018
I have been fortunate so far in harvesting dividends and adding to my total returns through profitable trading. I do not want to push my luck any further.
I did note, however, that JPM upgraded AGNC Investment to overweight from neutral on 12/20/18. The price target was increased to $18 from $17.5. I do not have a copy of that analyst report.
5. Intermediate Term Bond/CD Ladder Basket Strategy:
A. Bought 1 Boston Properties L.P. 3.125% SU Maturing on 9/1/23-In a Roth IRA Account:
I now own 3 bonds with 2 owned in this Roth IRA account.
FINRA Page: Bond Detail (prospectus linked)
Issuer: Operating Entity for Boston Properties Inc. (BXP who guarantees the notes.
Boston Properties Announces Third Quarter 2018 Results of $0.77 GAAP EPS and $1.64 FFO Per Share
BXP 2017 Annual Report (debt listed starting at page 154; note there is a 3.85% SU note maturing earlier in 2013)
Recent Bond Issue: Boston Properties Prices $1.0 Billion Offering of 4,5% SU Green Bonds Maturing in 2028 (11/13/18)
Bought at a Total Cost of 96.7 (with $2 Vanguard Commission)
YTM at TC Then at 3.896%
Current Yield at TC = 3.2316% (tax free in the Roth IRA)
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 sell 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 family members.
