Economy:
Fed Chair Powell says interest rates are 'likely to be higher' than previously anticipated
FDIC: Speeches & Testimony - 03/06/2023 - Remarks by FDIC Chairman Martin Gruenberg at the Institute of International Bankers ("The current interest rate environment has had dramatic effects on the profitability and risk profile of banks’ funding and investment strategies. First, as a result of the higher interest rates, longer term maturity assets acquired by banks when interest rates were lower are now worth less than their face values. The result is that most banks have some amount of unrealized losses on securities. The total of these unrealized losses, including securities that are available for sale or held to maturity, was about $620 billion at year end 2022. Unrealized losses on securities have meaningfully reduced the reported equity capital of the banking industry." emphasis added)
The FED's extremely abnormal monetary policies contributed to the Silicon Valley Bank collapse. The FED's failure to abandon ZIRP until March 2022, when the annual CPI rate was already at +8.5%, followed by a rapid increase in the federal funds rate, caused a wide spread between the yields that banks had to offer depositors and the yields on owned securities.The average weighted yield on available for sale securities at SIVB was only 1.56% as of 12/31/22.
2022 Annual Report at page 65-66
The much larger position in held to maturity securities had a weighted average yield of only 1.66%.
Notwithstanding the Fed's monetary policies, which made major interest rate management risks possible, a 1.56% and 1.66% yields on available-for-sale and held-to-maturity securities respectively as of 12/31/22 represents IMO extremely poor interest rate management (see my comments attached to the last post) Reuters reported that Moody's was preparing to downgrade SIVB's debt in response to the unrealized security losses. Silicon Valley Bank's demise began with downgrade threat | Reuters
Silicon Valley Bank is shut down by regulators in biggest bank failure since global financial crisis Banks can collapse when there is excessive reliance on deposits that exceed FDIC insurance limits and large depositors lose confidence in the bank's solvency, irrespective of whether that concern is justified. {SIVB reported 2022 4th quarter net income of $275M and 2022 net income of $1.509B. SEC Filed Earnings Press Release} As of last December, about 95% of the banks deposits were uninsured. Silicon Valley Bank customers scramble to meet payroll, pay bills
Even though the FED has caused problems for banks through an extended period of extremely abnormal monetary policies, the SIVB officers, possibly with a major assist from GS who advised the bank, were largely responsible for this collapse IMO, since they created the conditions last week that created a wildfire panic that resulted in large depositors pulling over $42B out of the bank just on 3/9/23, according to a filing made by a California agency. ORDER TAKING POSSESSION OF PROPERTY AND BUSINESS SIVB is no longer the parent company of Silicon Valley Bank. 8-K
It was an obvious mistake to announce that the available for sale securities were liquidated at about a $1.8 billion loss, and that the incinerated capital would be replaced by a large common and preferred stock offerings. SEC Filed Press Release (3/8/23) Those actions caused the panic.
Silicon Valley investors and founders express shock at SVB collapse Some firms who had large uninsured deposits may fail as a result since it is not likely that the FDIC will cover deposits in excess of $250,000, though additional funds will likely become available over time through asset sales.
If everyone had remained calm, both depositors and investors, the bank could have survived by completing its common and preferred stock offering, but that is not what humans do under those circumstances. Even if a rational person could remain calm, knowing that thousands would panic would lead that person, who saw no rational reason to panic, to withdraw large deposits.
Etsy delays payments to sellers due to Silicon Valley Bank collapse
Employment Situation Summary - 2023 M02 Results According to the BLS, the economy added 311,000 jobs in February. The gains for December and January were revised down by 34,000, lowering the combined total for those 2 months to +743,000. Average hourly earnings rose 8 cents and were up 4.6% Y-O-Y. The U-6 rate rose to 6.8% from 6.6% in January. Table A-15. Alternative measures of labor underutilization - 2023 M02 Results
+++++
Allocation Shifts Discussed in this Post:
Using a 1 year S&P 500 interactive chart, that index pierced its 200 day SMA line to the downside yesterday. Chart
The VIX is in an Unstable Vix Pattern.Vix Asset Allocation Model Explained Simply (5/17/2009 Post); Vix Asset Allocation Model | Seeking Alpha; VIX Chart from 2007: Alerts and Triggers Major Disruption of Cyclical Stable Bull VIX Pattern (5/2/2009 Post); More on the Vix Model: What it Does not Predict is as Important as What it Does/Parallels to VXO 1987-1988 (5/8/2009 Post); VIX and S & P Compared 1990 to 1997 (5/20/2009 Post)
Interests rate declined on Friday as part of a flight to safety move.
 |
| March 2023 Treasury Yield Curve |
Treasury Bills: +$7,000 in principal amount
Corporate Bonds: +$5,000 in principal amount
FDIC Insured CDs: +$5,000
Individual Common Stock Net Outflow: -$2,307.6
(consisting of $2,990.98 in proceeds minus $683.38 in purchases)
Weighted Average Yield Stock Purchases: 9.84%
Outflow CEF Stock Fund Sells: -$2,756.52
Net Outflow Stocks/Stock Funds: -$5,064.12
Realized Gain Individual Stocks and Funds: +$1,120.27
2023 Net Outflow Stocks and Stock Funds: -$34,224.33
Outflow Exchange Traded Bonds: -$331.48 in proceeds
Realized Gain Exchange Traded Bonds: +$174.82
++++
Putin and His Servile Orcs:
Last Thursday, Russia launched 95 missiles targeting Ukrainian residential buildings and civilian infrastructure facilities. Six of the missiles were hypersonic (the Kinzhals), which can not currently be shot down by Ukraine's air defense systems. Russia said this was a response to what it termed a "terrorist" attack inside Russia where someone allegedly killed two citizens in a small village by spraying their car with bullets. Russia claimed Ukraine was responsible which makes no sense. What makes sense to me is that Russia killed them for propaganda purposes.
For Russia, it is not a terrorist act for it to routinely target apartment buildings, homes, hospitals, energy and water infrastructure facilities, nursing homes and schools in Ukraine, but it is a terrorist act for Ukraine to target a military installation inside Russia that is used to attack Ukrainian civilian targets.
Documenting the horror of mass rape in Ukraine - YouTube
Russian State TV Host Vladimir Solovyov Sounds Battle Cry Against U.S., NATO and the "Collective West Solovyov needs to volunteer his son for the front lines in Ukraine where the Russian army has proven to be incompetent and ineffective over the past 1+ years. If his son survives that conflict, then he can volunteer him for his sought after conventional war with the U.S. and Nato. Solovyov is the most popular commentator on Putin TV.
How Russia kidnapped thousands of Ukrainian Children - YouTube
Russian soldiers execute unarmed Ukrainian PoW after he says ''Glory to Ukraine'' (video included); Tymofiy Shadura, Ukrainian PoW executed by russian orcs. Vlog 313: War in Ukraine - YouTube The Orcs were proud of this war crime and posted the video online.
Russia-linked individuals working to trigger insurrection against Moldovan government
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Trump and His Party:
Fox Cuts Out Trump Saying in Interview That He May Let Russia Take Over Areas of Ukraine
A Troubling Sign for the 2024 Presidential Election - The Atlantic Of the 5 Maricopa County election commissioners, 4 are republicans including the outgoing Chairman Bill Gates. All have been harassed and threatened repeatedly with violence by Trumpsters for certifying as required by law the 2020 and 2022 election results that had democrats carrying that county. Kari Lake, the 2022 anti-democracy candidate for Arizona's governor, stated that the Maricopa election commissioners needed to be "locked up" and were part of a "corrupt house of cards" who are "daring us to do something about it". What should the Trumpsters in Arizona do about it? Lake referred to the Second Amendment and then said "We're going to burn it to the ground".
Tucker Carlson Used the January 6 Footage to Try and Gaslight America | Vanity Fair In TrumpWorld, the 1/6 insurrection consisted just of some innocent sightseers visiting the capitol. Carlson: "These were not insurrectionists. They were sightseers." It is a sorry state of affairs that anyone watches him.
Fox has not hurt its brand by peddling false claims to the Trumpster True Believers since those listeners believed the false claims and watched Fox to validate their reality creations about the "stolen election" and other firmly held opinions. Fox has hurt its brand by having to produce documents in the Dominion defamation action that show the disdain that several prominent Fox "news" personalities had for Trump. What Tucker Carlson said about Trump in private texts vs. on Fox News - The Washington Post
Elon Musk publicly mocks Twitter worker with disability who is unsure whether he's been laid off; Elon Musk tweets support for 'Dilbert' creator after racist tirade
++++
1. Small Ball - Exchange Traded Bonds:
Proceeds: $331.48
A. Eliminated ARGD in 2 Taxable Accounts - Sold 5 at 22.1 and 10 at $22.12:
Quote: Argo Group International Holdings Ltd. 6.5% Senior Notes Due 2042 (ARGD)
Investment Category: Exchange Traded Baby Bonds
Profit Snapshots: +$53.85
 |
| Market Discount $1.75 |
Remaining Position Schwab Taxable Account: 110 shares
 |
| 110 Shares AC at $22.67/Price Intraday on 3/1/23 |
Previous Sell Discussions (includes trades under former symbol AGIIL):
Item # 5.A. Pared ARGD in Schwab Account- Sold 25 at $25.4-Part of Highest Cost Lot (5/23/20 Post); Item # 3 Sold 50 AGRD at $25.87 (9/25/19 Post); Item # 4 Sold 100 AGIIL at $25.11 (9/25/17 Post); Item # 4 Sold 50 AGIIL at $26.89 - Update For Exchange Traded Bonds And Preferred Stocks Basket Strategy As 6/3/16 - South Gent | Seeking Alpha; Item # 2 Sold 50 AGIIL at $24.21-Roth IRA (6/28/14 Post); Item # 2 Sold: 50 AGIIL at $24.48 (6/7/14 Post)
ARGD-AGIIL Realized Gains to Date: $653.79
B. Eliminated DDT in 2 Taxable Accounts - Sold 8 at $25.5 and 5 at $25.5:
Quote: Dillard's Capital Trust Preferred 7.5%
Issuer: Dillard's Inc. (DDS) - Department Stores
DDS Analyst Estimates | MarketWatch
DDS SEC Filed Earnings Press Release for the Fiscal Quarter Ending 1/28/23
Investment Category: Trust Preferred Securities, a subcategory of Exchange Traded Bond (see also Regular Preferred and Trust Preferred (1/1/2009 Post)
Profit Snapshots: +$120.97
 |
| Market Discount +$2.21 (profit classified as interest income) |
Last Buy Discussions: Item #3.B. Added 1 at $17.15; 1 at $16; 1 at $15.28; 1 at $14.17 (5/16/20 Post); Item # 3.C. Bought 10 DDT at $21.61, 2 at $19.31, 1 at $14.08; 1 at $13.34 (3/21/20 Post)
Remaining Taxable Account: 20 shares with AC at $16.72 per share
 |
| Price Intraday on 3/1/23 |
Yield at $16.72 = 11.21%
Security: Prospectus
Par Value: $25
Coupon: 7.5%
Legal Form of Ownership: Trust Preferred
Placement in Capital Structure: Junior bond allowing for interest payment deferrals subject to Stopper Clause.
Interest Payments: Quarterly
Last Ex Interest: 1/13/23 (owned as of)
Next Ex Interest: 4/13/23
Maturity: 8/1/2038
Issuer Optional Call: Callable now at par value + accrued and unpaid interest
DDT Realized Gains to Date: $354.89
The lowest price paid for this junior bond was $5.82. Item # 4. Bought 50 DDT at $5.82 (3/18/2009 Post)
2. Small Ball Common Stock Sells: Proceeds = $2,990.98
I am reducing my allocation to non-dividend paying common stocks. This is part of a risk reduction approach when I view MM and Treasury Bill yields to be satisfactory given my objectives.
The Silicon Valley Bank collapse may also have an impact on BDCs who lend money to firms that had uninsured deposits at this bank. I have no way of assessing that impact now. Based on a regulatory filing, $42B in deposits were withdraw on 3/9/23.
Until I have a better handle on that potential problem, I am going to quit my small ball buying in the BDC sector starting today. I had a net outflow in that niche sector last week of $1,289.18. The sales were prior to the SIVB news.
A. Eliminated BRK/B - Sold 2 at $304.25:
Quote: Berkshire Hathaway Inc. Cl B (BRK.B)
Proceeds: $608.49
Website: BERKSHIRE HATHAWAY INC.
Profit Snapshot: $240.37
Last Discussed: Item # 1.C. Bought 1 BRK/B at $186.5; 1 at 181.97 (6/13/20 Post)
Dividends: None and none expected
Last Earnings Report (Q/E 12/31/22):
Class B E.P.S. = $8.27, down from $17.79 in the 2021 4th quarter
2022 Class B E.P.S. = ($10.36), down from +$39.64
The loss resulted in having to included unrealized depreciation in investments in GAAP net income as explained here:
Operating Earnings:
B. Eliminated GD - Sold 1+ Shares at $229.5:
Proceeds: $304.57
Quote: General Dynamics Corp.
GD Analyst Estimates-MarketWatch
Website: General Dynamics | Home
Profit Snapshot: $104.82
Last Discussed: Item # 1.L. Several Fractional Share GD Purchases - Prices $147.26 to $152.55 (1/9/21 Post)
Dividend:
Yield at $229.5 =
Last Earnings Report (Q/E 12/31/22): SEC Filed Press Release
E.P.S. = $3.58, up from $3.42 in the 2021 4th quarter
Revenues: $10.9B
2022 E.P.S. = $12.19 on $39.4B
Free Cash Flow: $175M, down from $1.297B
2022 Free Cash Flow: $3.465B up from $3.384B
C. Eliminated TRST in 2 Taxable Accounts - Sold 5 at $36.84; 5 at $37.02:
Quote: Trustco Bank Corp. (TRST)
Proceeds: $369.31
Profit Snapshots: +$41.28
Last Discussed: Item # 3.D. Bought 5 TRST at $32.91 (1/30/23 Post) I discussed the last earnings report in that post and nothing substantive to add here. SEC Filed Earnings Press Release
TRST Trading Profits to Date: $1,408.67
Sell Discussions: There was a 1 for 5 reverse stock split in 2021 that explains the lower prices. TRST Split History; Item # 3.A. Eliminated TRST in Schwab Taxable Account - Sold 20 at $38 (12/13/22 Post)(profit snapshot = $129.8); Item # 3.G. Eliminated TRST-Sold 15+ in Schwab Taxable at $7.45 and 40+ in Fidelity Taxable at $7.44 (5/14/21 Post)(profit snapshots = $111); Item # 1.D. Pared TRST-Sold 10 at $6.72 (1/9/21 Post); Item # 2.B. Sold 125 TRST at $8.6 (11/2/19 Post); Item # 2 Sold 100 TRST at $6.69 Update For Regional Bank Basket Strategy As Of 7/26/16-South Gent | Seeking Alpha; Item # 1 Sold 315+ TRST at $6.92 (1/11/15 Post); Sold 50 TRST at $7.29 (11/25/13 Post); Sold 308 TRST at $6.64 (10/28/13 Post)(largest gain to date = $549.47)
I am keeping the 20 shares owned in my Fidelity taxable account that have a $31.83 AC per share. I will consider adding to that position when a purchase will lower my average cost per share.
D. Eliminated PFLT in Fidelity Taxable Account - Sold 15 at $10.93:
Proceeds: $164.02
Quote: PennantPark Floating Rate Capital (PFLT)
10-Q for the Q/E 12/31/22 (summary list of investments starts at page 8)
Website: PFLT - PennantPark
Annual Report for the fiscal year ending 9/30/22
Management: External
In January 2023, PFLT sold shares at slightly below GAAP net asset value per share as of 12/31/22. PennantPark Floating Rate Capital Ltd. Announces Pricing of Public Offering of Common Stock (priced at $11.1) PFLT received $11.1998 due to a contribution from the external manager.
The prior public offering completed in August 2022 was at $12.4 per share. PennantPark Floating Rate Capital Ltd. Announces Pricing of Public Offering of Common Stock (8/8/22)
I am keeping the shares owned in my Schwab account:
 |
| Price as of 3/3/23 Close; 95+ shares |
Profit Snapshot: +$74.78
Last Discussed: Item # 2.H. Added to PFLT in Schwab Account - Bought 10 at $10.95 (1/3/23 Post)
Prior Buy Discussion: Item # 1.G. Bought 10 PFLT at $6.06; 4 at $5.75 (6/6/20 Post)
Net Asset Value per share history:
12/31/22: $11.30
9/30/22: $11.62
12/31/21: $12.70
3/31/21: $12.71 Press Release 2021 1st Q Earnings
3/31/20: $12.20 10-Q at page 5
12/31/19: $12.95
9/30/19: $12.97
6/30/19: $13.07
3/21/19: $13.24
12/31/18 $13.66
9/30/18 $13.82
6/30/18: $13.82
9/30/17: $14.10
9/30/16: $14.06
9/30/15: $13.95
9/30/14: $14.40
9/30/13: $14.10
9/30/12: $13.98
PFLT Dividend History | Nasdaq
Sell Discussions: Item # 7.E. Sold Highest Cost 20 PFLT Shares Purchased with Dividends at $14.07 - Schwab Taxable Account (4/28/22 Post)(profit snapshot = $46.13); Item # 3. Sold 102 PFLT in Schwab Taxable Account at $13.26 -Highest Cost Lots (7/30/21 Post)(profit snapshot = $30.92); Item # 2.A. Eliminated PFLT in Fidelity Account-Sold 81+ at $12.01 (12/14/19 Post)($29.66) If I still owned the shares sold at the highlighted prices, I would probably be unable to achieve my goal for BDC stocks, which is to realize any gain on the shares, prior to any ROC adjustments to the tax cost basis, plus the dividends.
E. Eliminated SLRC in 2 Taxable Accounts - Sold 37+ at $15.79 and 30 at $15.79:
Proceeds: $1,061.95
Quote: SLR Investment - Externally Managed BDC
2022 Annual Report (risk summary starts at page 24 and ends at page 55; summary of investments starts at page 92; SLRC debt discussed starting at page 112; five year financial data at page 113)
Profit Snapshots: +$66.68
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| Vanguard 30 Shares +$22.81 |
 |
| Schwab 37+ Shares +$43.87 |
Last Discussed: Item #4.H. Added to SLRC in Fidelity Taxable Account - Bought 1 $13.38; 4 at $12.53; 3 at $12.34 (10/11/22 Post)
Remaining SLRC Taxable Account Position: I am keeping the 137+ SLRC shares owned in my Fidelity account that have a $15.32 average cost per share. I am reinvesting the dividends given the current price discount to net asset value per share.
Discount at $15.32: -16.42% (using 12/31/22 NAV per share)
Yield at $15.32: 10.77%
Dividends: Monthly at $.136667 per share ($1.64 annually)
Net Asset Value per share history:
12/31/22: $18.33
6/30/22: $18.53
12/31/21: $19.93
12/31/20: $20.16
9/30/20: $20.14 10-Q
12/31/19: $21.44
12/31/18: $21.75
12/31/17: $21.81
12/31/16: $21.74
12/31/15: $20.79
12/31/14: $22.05
12/31/13: $22.50
12/31/12: $22.70
12/31/11: $22.02
Initial Public Offering: Prospectus February 2010, priced to the public at $18.5 and at $17.205 to the underwriters
Last Earnings Report (Q/E 12/31/22): SEC Filed Earnings Press Release
Net Asset value per share: $18.33
NII per share = $.41
Portfolio Composition:
Risk Ratings:
99.7% performing
Last Sell Discussion: Item # 3.C. Sold 60 SLRC at $21.56 (10/17/18 Post)(profit snapshot = $37.14) Other sell discussions are mentioned in this post near the end: Update For Portfolio Positioning And Management As Of 3/13/16 | Seeking Alpha
SLRC Realized Gains to Date: $166.75
Goal: Any total return before ROC adjustments to the tax cost basis in excess of the dividend payments.
F. Eliminated PSEC in 2 Taxable Accounts - Sold 20 at $7.39, Sold 20 at $7.4:
Quote: Prospect Capital Corp. (PSEC)- An Externally Managed BDC
Investment Category: Monthly Income Generation
Profit Snapshots: +$95.56
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| Vanguard +$49.06 |
There was a slight ROC adjustment to the tax cost basis.
For example, the tax cost basis per share for the Vanguard PSEC position was $4.95. Those shares were bought at $5.02 on 11/3/20:
I am keeping the 20 shares owned in my Fidelity taxable account that have a $4.92 average cost per share. I will consider adding to that position when a purchase will lower my AC per share.
Last Discussed: Item # 1.G. Sold 5 PSEC at $8.12 (9/24/21 Post)(profit snapshot = $13.71)
Last Buy Discussion: Item #1.P. Multiple Small Ball Purchases of PSEC-Sold 105 and Kept 42+ (2/27/21 Post)(profit snapshot = $38.88)
Dividend: Monthly at $.06 per share ($.72 annually)
Dividend History: Unfavorable IMO with several dividend cuts.
Net Asset Value Per Share History: Unfavorable IMO over its history as a public company, but showing signs of stabilization since 2015.
12/31/22: $9.94
12/31/21: $10.01
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| Page 54, 10-Q |
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| 2017 PSEC 351 Shares Net of +$62.19 |
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| 2012 PSEC 100 Shares +$60.47 - Roth IRA |
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| 2010 Regular IRA +$68.04 |
G. Eliminated KW - Sold 10 at $18.68:
Quote: Kennedy-Wilson Holdings Inc.
Proceeds: $186.81
"As of December 31, 2022, our AUM stood at $23.0 billion. The real estate that we hold in our global portfolio consists primarily of multifamily apartments (57%) and commercial (39%) based on Consolidated NOI and JV NOI. Geographically, we focus on the Western United States (61%), the United Kingdom (16%) and Ireland ((21%). "
KW is not organized as a REIT.
2022 Annual Report (risk summary starts at page 14 and ends at page 30; debt discussed starting at page 49)
Proceeds: $186.81
Profit Snapshot: $58.67
Part of Profit Due to ROC Adjustments to the Tax Cost Basis:
 |
| 2022 ROC Adjustments |
 |
| 2021 ROC Adjustments at 100% of Dividends Paid |
The 2021 ROC adjustment for the 10 shares sold was $.88 per share.
The 2022 ROC adjustment for those shares was $.60, rounded up, per share share.
$14.8 of the $58.67 profit was attributable to the 2021 and 2022 ROC adjustments.
As discussed earlier, the ROC adjustments can benefit a person's heirs, provided the tax cost basis can be stepped back up to market value on the DOD (or alternate valuation date). That is the current law. The taxpayer avoided taxation of the dividends classified as ROC; and the ROC adjustments that lowered the tax cost basis become irrelevant to the person's heirs under the current stepped up cost basis rule.
I will look at the ROC adjustments when making a before tax total return calculation. The total return is the profit using original cost basis + the dividends.
Last Discussed: Item # 2.A. Sold 2+ KW at $20.1 (5/28/21 Post)(profit snapshot = $17.81)
Buy Discussions: Item # 3.J. Added to KW-Bought 1 at $14.26; 1 at $13.81; 1 at $13.2 (11/7/20 Post); Item # 1.F. Started KW-Bought 10 at $14.89 (8/8/20 Post)
Dividend: Quarterly at $.24 per share, last raised from $.22 effective for the 2022 first quarter payment. The rate was $.12 in 2015.
Dividend Information | Kennedy Wilson
Last Ex Dividend: 12/29/22 (owned as of)
Last Earnings Report (Q/E 12/31/22): SEC Filing
GAAP Net Income: 22.6M or $.16 per share
Non-GAAP Net Income: $69.4M or $.505 per share
GAAP to Non-GAAP Reconciliation:
In making the GAAP to Non-GAAP adjustment, KW does not deduct realized gains from property sales which an equity REIT would do when calculating FFO. An adjustment is made in the "Net Operating Income" calculation.
I am concerned about KW's debt level which was at $7.941+B as of 12/31/22.
KW's complexity makes it difficult for me to invest.
Current Position: None
3. CEF Stock Fund Eliminations:
Proceeds: $2,756.52
A. Eliminated JRI in Fidelity Taxable Account - Sold 130 at $12.13:
Proceeds: $1,577.48
Quote: Nuveen Real Asset Income & Growth Fund Overview - A Leveraged CEF
Asset allocation as of 1/31/23:
Investment Category: Monthly Income Generation
Sponsor's website: JRI - Nuveen Real Asset Income and Growth Fund | Closed-End Fund | Nuveen
I am keeping the shares owned in my Vanguard taxable account.
Profit Snapshot: Net of +$184.6
Last Discussed: ,Item # 6.A. Bought 10 JRI at $10.98 in Vanguard Taxable Account (11/1/22 Post)
Leveraged at about 29.36% as of 1/31/23
Last SEC Filed Shareholder Report: Nuveen Real Asset Income & Growth Fund (semiannual period ending 6/30/22) Debt financing costs were at a .7% spread to the 1 month Libor rate as of 6/30/22, with .125% charged on undrawn balances. Borrowing costs are going up. Net asset value per share has gone down significantly over the past year. Buying securities with borrowed money that is rising in cost does not work so well when the securities are going down in value.
Data Date of 3/3/23 Trade:
Net Asset Value per share: $13.99
Closing Market Price: $12.11
Discount: -13.44%
Sourced: JRI - CEF Connect
Dividend: Monthly at $.087 per share ($1.158), reduced from $.0965 effective for the April 2023 payment, which was reduced from $.117 per month effective for the April 2020 payment.
(JRI) Dividend History | Nasdaq
To reduce ROC supported dividends, a CEF needs IMO to cut the dividend rate when leverage costs are in a strong uptrend.
The dividend has significant ROC support, click distribution tab at JRI - CEF Connect.
Some Prior Sell Discussions: Item # 1.I. Pared JRI Again-Sold 12.661 shares at $16.31-Remaining Shares Bought With Dividends in Fidelity Taxable Account (10/1/21 Post)(profit snapshot = $53.03); Item # 2.C. Pared JRI-Sold 22.235 at $16.11(8/6/21 Post)(profit snapshot = $42.31); Item # 2.A. Pared JRI-Sold 30 at $15.9-highest cost shares (6/19/21 Post)(profit snapshot = $14.73); Item # 1.K Eliminated JRI in Schwab Taxable Account-Sold 100 at $11.48 (6/6/20 Post)(profit snapshot = $69.35); Item # 2.A. Sold 102+ JRI at $17.98 (12/22/19 Post)(profit snapshot = $140.67); Item # 1.A. Sold 100 JRI at $17.51(10/30/19 Post )(profit snapshot = $100.41); Item # 4 Sold 100 JRI at $17.23 (10/2/19 Post)(profit snapshot = $40.45)
JRI Realized Gains to Date = $665.52 (includes $19.97 realized gain from selling 9 shares in my Vanguard account in July 2021 that was not discussed in posts)
Goal: Any total return in excess of the dividend payments.
B. Eliminated IGR - Sold 180 at $6.54:
Proceeds: $1,179.04
Quote: CBRE Clarion Global Real Estate Income Fund Overview
Investment Category: Monthly Income Generation
Profit Snapshot: +$253.51
Last Discussed: Item # 2.G. Pared IGR in Fidelity Account - Sold 10 at $6.69 (2/5/23 Post)(profit snapshot = $8.17)
Last Buy Discussions: Item # 1.D. Added to IGR-Bought 10 at $5.79; 5 at $5.59 (11/21/20 Post); Item # 1.E. Added 5 IGR at $3.75; 50 at at $5.69; and 10 at $5.1 (5/16/20 Post)
Dividends: Monthly at $.06 per share with some ROC support.
Data Date of 3/3/23 Trade:
Net Asset Value Per share: $6.76
Market Price: $6.57
Discount: -2.81%
Average 3 year discount: -9.74%
Average 5 year discount: -10.92%
Sourced: IGR - CEF Connect (click "Pricing Information" tab)
One reason for eliminating IGR is that the discount to net asset value is significantly below the averages.
Other reasons include duplication in owned securities, leverage of about 31% in a rising interest rate setting, and generally unsatisfactory performance compared to my REIT equity and preferred stock purchases.
Borrowings: .75% spread to the federal funds rate
 |
| SEC Filed Annual Report at page 29 |
2022 ROC: $2.375+M
5 Year Annual Average Total Return = 7.21% (as of 3/6/23, using price)
Sourced: CBRE Global Real Estate Income (IGR) Performance | Morningstar
Total annual average return for 10 years was then at 4.45% and 3.64% for 15 years.
IGR is about to do a subscription rights offering. Prospectus; Press Release dated February 27, 2023
Other Sell Discussions 2013 to 2022: Item # 2.H. Pared IGR - Sold 2 at $9.09 (8/27/21 Post)(profit snapshot = $6.29); Item #3.H. Sold All IGR Shares Purchased with Dividend (6/12/21 Post)(profit snapshot = $49.1); Item # 1.R. Sold 42+ IGR at $8.1 (4/17/21 Post)(profit snapshot = $43.23); Item # 1.A. Pared IGR-Sold 100 at $7.64 (4/9/21 Post)(profit snapshot = $63.6); Item # 1. I. Eliminated IGR Vanguard Account-Sold 100 at $5.95 and Eliminated IGR in Schwab Account-Sold 100 at $5.96 (6/13/20 Post) (profit snapshots = $113.32); Item # 1.C. Sold 9 IGR at $8.33 (2/19/20 Post)(profit snapshot = $4.99); Item # 2.A. Sold 100 IGR at $8.01 (12/28/19 Post)(profit snapshot = $42.98); Item # 1 Sold 283 IGR at $7.89+ (8/24/13 Post)(profit snapshot on all 2013 sales = $77.62)
A. Bought 2 FMC 4.1% SU Maturing on 2/1/24 at a Total Cost of 98.693:
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Issuer: FMC Corp. (FMC)
FMC Analyst Estimates | MarketWatch
FMC SEC Filed Earnings Press Release for the Q/E 12/31/22
Finra Page: Bond Detail (prospectus linked)
Credit Ratings: Baa2/BBB-
YTM at Total Cost = 5.6%
Current Yield at TC = 4.154%
Last Bond Offering (9/2019): Prospectus
B. Bought 2 Affiliated Managers 4.25% SU Maturing on 2/15/24 at a Total Cost of 98.835:
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Issuer: Affiliated Managers Group Inc. (AMG)
AMG Analyst Estimates | MarketWatch
AMG SEC Filed Earnings Press Release for the Q/E 12/31/22
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings: A3/BBB+
YTM at Total Cost: 5.533%
Current Yield at TC = 4.3%
I now own 4.
C. Bought 1 Nextera Capital 4.255% SU Maturing on 9/1/24 at a Total Cost of 98.106:
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Issuer: Wholly owned by NextEra Energy Inc. (NEE) who guarantees the notes.
NEE SEC Filed Earnings Press Release for the Q/E 12/31/22
Finra Page: Bond Detail (prospectus not linked)
Note that the Finra page has the incorrect coupon. This bond was originally issued as part of an Equity Unit offering and later remarked as a standalone bond with a 4.255% coupon, as explained in the prospectus linked above.
Credit Ratings: Baa1/BBB+
YTM at Total Cost: 5.582%
Current Yield at TC = 4.337%
The last Nextera Capital bond offering was last month Prospectus ($2.5B of 6.051% SU maturing on 3/1/25, originally offered in February 2021 as part of an Equity Unit offering)
I now own 6.
5. Treasury Auction Buys: $7,000 in principal amount
A. Bought 5 Treasury Bills at 3/6/23 Auction:
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91 Day Bill
Matures on 6/8/23
Interest: $60.2
Investment Rate: 4.903%
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119 Day Bill
Matures on 7/11/23
Interest: +$33.35
Investment Rate: 5.216%
6. CDs-FDIC Insured: $5,000 in principal Amount
In my Schwab account, I am redirecting some proceeds received from maturing short term T Bills (2-3 months) into longer term CDs (A and B below).
I have never even considered the possibility of having uninsured deposits at a bank.
A. Bought 2 Schwab Bank 5.25% CDs Maturing on 9/16/24:
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Interest Paid Semiannually.
B. Bought 2 Pinnacle Bank 5.3% CDs Maturing on 3/24/25:
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Interest Paid Monthly.
C. Bought 1 Renasant Bank 5.2% CD Maturing on 12/22/23:
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Interest paid at maturity.
7. Small Ball Buys:
A. Added to VNO - Bought 1 at $19.53; 4 at $18.76, 1 at $17.5:
Quote: Vornado Realty Trust (VNO)
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Last Discussed: Item # 3.B. Added to VNO - Bought 2 at $20.78; 2 at $20.6 (1/10/23 Post)
Average cost per share: $22.98 (31+ shares)
Dividend: Quarterly at $.375 per share ($1.5 annually), slashed from $.53 effective for the 2023 first quarter payment. The dividend was at $.66 until the 2020 third quarter when it was cut to $.53.
Dividend History: Negative.
Yield at Current Rate: 6.53% (assumes no further cuts)
Last Ex Dividend: 1/27/23
Last Earnings Report (Q/E 12/31/22):
SEC Filed Press Release and Supplemental
Adjusted FFO per share = $.91
Revenues: $446.94M
GAAP Loss: $493.28M
"By way of background, in April 2019, we recognized a $2.559 billion gain upon the transfer of seven properties to the Retail JV, which included a GAAP required write-up to fair value of its retained interest in the properties. The $483,037,000 impairment charge recognized this quarter together with the $409,060,000 impairment charge previously recognized in 2020, effectively reverse a portion of the $2.559 billion gain attributable to the 2019 required write-up"
I am now in an average down mode in 1 share lots.
Quote: Oaktree Specialty Lending Corp. (OCSL) - Externally Managed BDCs
Annual Report for the F/Y Ending 9/30/22 (risk factor summary starts at page 22 and ends at page 47; summary of investments starts at page 87) A new risk factor for BDCs is that one or more of their portfolio companies may go bankrupt by losing uninsured deposits at Silicon Valley Bank.
Last Discussed: Item # 4.B. Bought 10 OCSL at $7.09 in Schwab Account (1/23/23 Post) Subsequent to that purchase, there was a 1 for 3 reverse split. The split caused the formation of a fractional share which was sold before it reached my account, leaving me with 3 shares out of the original 10 purchased.
Average cost per share: $19.76 (20 shares)
Dividend: Quarterly at $.55 per share ($2.2 annually), raised from $.54 effective for the next payment.
Yield at New AC = 11.13%
Next Ex Dividend: 3/14/23
Last Earnings Report (Q/E 12/31/22): SEC Filed Press Release and 10-Q
GAAP Net Investment Income per share = $.63, up from $.59
Adjusted NII per share: $.61, up from $.55
The adjustment to GAAP relates to interest income accretion due to merger accounting adjustments. I would use the adjusted number.
Net asset value per share: $19.63
No investments were on nonaccrual as of 12/31/22.
Weighted Average Yield on Debt Investments: 11.6% (some PIK interest with cash yield at 10.3%)
Floating Rate at 87.3%; Fixed Rate at 12.7%
Estimated Impact from Interest Rate Changes:
 |
| Pages 104-105, 10-Q |
C. Bought 10 WU at $12.7; 5 at $12.37; 5 at $12.05; 5 at $11.82; 5 at $11.67; 5 at $11.25: Cost $422.71
Quote Western Union Co. (WU)
These are my first purchases. The recent price decline and current dividend yield makes this stock slightly more attractive as a contrarian value play IMO. By slightly, I mean multiple purchases that have now totalled 35 shares.
WU Analyst Estimates | MarketWatch
2 Year Basic Financial Data:
 |
| P. 46, Annual Report |
Average cost per share: $12.08 (35 shares)
Dividend: Quarterly at $.235 per share ($.94 annually)
The Western Union Company -- Dividend History
Yield at AC = 7.78%
Next Ex Dividend: 3/16/23
Last Earnings Report (Q/E 12/31/22): SEC Filed Earnings Press Release and Slide Presentation
GAAP E.P.S. = $.65, positively impacted by a $96.9M gain selling WU's U.K. Business Solutions Business
Non-GAAP E.P.S. = $.32, a 50% decrease compared to the 2021 4th quarter. The sold U.K. Business solutions unit and operations in Belarus and Russia contributed about 8 cents and 6 cents to the 2021 4th quarter non-GAAP E.P.S. WU ceased operations in those 2 countries last year.
Excluding the contribution from the U.K. sale, 4th quarter revenues were done 15% compared to the 2021 4th quarter and down 9% on a constant currency basis.
2023 Outlook: GAAP E.P.S. range $1.48-$1.58; Non-GAAP E.P.S. range at $1.55-$1.65
2022 GAAP E.P.S. $2.34 (includes $243M gain on sale of a business)
2022 Non-GAAP E.P.S. = $1.76
WU bought back $175M in stock during the 2022 4th quarter.
Cash and Cash Equivalents as of 12/31/22: $1.2859B
Debt at $2.6168B
The commercial paper borrowings stood at $180M, down from $370M as of 12/31/21, had a weighted average annual interest rate of 4.6% and a weighted average term of 3 days. I would hope that the company would use some cash to cut down on that borrowing source.
Risk Mitigation Measures:
Maximum Position: 100 shares based on WU's negative earnings and revenue trends
Purchase Restriction: 5 share lots with each subsequent purchase required to be a the lowest price in the chain.
Trading Small Ball Rules
D. Added to BDN - Bought 5 at $5.61:
Our Properties | Brandywine Realty Trust
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Chart: Major Bear Market Trend-No indication of a bottom yet
I discussed BDN in my last post. Item # 4.C. Added to BDN - Bought 10 at $5.79 (3/6/23 Post) I discussed the last earnings report in that post and have nothing substantive to add here.
Dividend: Quarterly at $.19
New AC per share = $7.67 (145+ shares)
Yield at New AC = 9.91%
Yield at $5.61 = 13.55%
Next Ex Dividend: 4/4/23
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.
