Economy:
ADP jobs report: Private sector added 497,000 workers in June The consensus estimate was for 220,000. ADP® Employment Report
The BLS reported that payrolls, which includes both private and government jobs, increased by 209,000 in June. The consensus was at 240,000.
Average hourly earnings rose 12 cents to $33.58. The 12 month increase was 4.4%.
The average hourly work week rose .1 to 34.4 hours.
"The change in total nonfarm payroll employment for April was revised down by 77,000, from +294,000 to +217,000, and the change for May was revised down by 33,000, from +339,000 to +306,000. With these revisions, employment in April and May combined is 110,000 lower than previously reported." The U-6 number increased to 6.9% from 6.7%.
The unemployment rate declined .1% to 3.6% and has ranged from 3.4% to 3.75% since March 2022.
The current unemployment rate is historically low as shown in this chart that starts in January 1948:
The current forecast is that new vehicle sales rose 12% to 14% in the first half. J.D. Power estimates that the average selling price was about $46,000 in June. The increase in sales is difficult for me to understand given the price tag.
The ISM Manufacturing PMI for June declined to 46% from 46.9% in May. That is the lowest level since May 2020. The New Orders component, while still in contraction, did increase 3 percentage points to 45.6%.
Ralph Axel, the Bank of America interest-rate strategist, made an observation last week that I have been making for several months. The Fed's rapid and aggressive interest rate increases have not had the desired impact on the U.S. economy in part due to increased disposable income from the roughly $17 trillion in household savings.
I do not know how Axel came up with that $17T number. The number would be lower using only FED data for savings accounts, money market funds and CDs. (Table 3: Federal Reserve Board - Money Stock Measures - H.6 - June 27, 2023) I would not include "Demand Deposits" since interest rates for those deposits have not gone up and consequently are not generating more disposable income. The amount invested by households in treasury bills has gone up but I do not have an estimate for household ownership
Axel: "Households aren’t losing wealth in the liquidity drain but are swapping into higher yielding government liabilities. For the Fed, this means that QT is probably less potent in slowing demand, which implies greater risks of a higher, and higher-for-longer, Fed rate path than markets currently price.”
Other important factors supporting consumer spending include the refinancing of home mortgages at historically low long term rates and the average annual wage increase (4.4%) rising faster than the last reported annual CPI (4%). Of those two factors, the refinancing of mortgage obligations at historically long term rates is the more important, providing increased disposable income after mortgage servicing payments on a monthly basis that can be used to finance spending, pay down higher cost debt, saved and/or invested at rates higher than the low mortgage coupons.
Mortgage Debt Service Payments as a Percent of Disposable Personal Income - St. Louis Fed
I use a ladder approach to fixed income investing, with several securities maturing each week. The reinvestment of those proceeds, other than from recent short term treasury bill auctions, will generate more income, a result that will continue for as long as the FED continues to push short term rates higher.
Fed's Goolsbee sees 'golden path' to lower inflation without a recession
++++
Allocation Shifts Discussed in this Post:
Corporate Bonds: $8,000 in principal amount.
Treasury Bills Purchased at Auction: $6,000 in principal amount.
CDs - FDIC Insured: $1,000
With treasury bills providing slightly more yield than comparable maturity CDs, I have started to allocate more to treasury bills purchased at auction using proceeds from maturity securities.
Common Stocks: -$240.64
(Consisting of $578.17 in proceeds minus $337.53 in purchases)
Weighted average yield stock purchases: 8.17%
Stock Funds: +$35.1
Net Outflow Common Stocks/Stock Funds: -$205.54
REIT Equity Preferred: $182.5 (yield at 9.08%, monthly)
Bank Holding Fixed-to-Floating Equity Preferred: +$67.83
2023 Net Outflow Common Stocks/Stock Funds: -$30,333.98
+++
Putin and His Servile Orcs:
The Orcs continued to target Ukrainian civilians last week. A Russian cruise missile was deliberately directed at an apartment complex in the western Ukrainian city of Lviv, murdering at least 4 people including a 95 year woman who survived WWII. Russian cruise missile attack on Ukraine city of Lviv kills 4 people and injures dozens - ABC News
The Zaporizhzhia nuclear plant is danger and these people live next door - The Washington Post Ukraine claims that the Orcs have planted explosives next to 4 of the six nuclear reactors and have mined the cooling ponds for the reactors. It would not be surprising for the Orcs to deliberately create another Chernobyl when and if the Ukrainian army drives them out of this area.
Chernobyl (2019) | Official Trailer | HBO - YouTube
In Small Victory, Signs of Grueling Combat Ahead in Ukrainian Counteroffensive - The New York Times This report is consistent with others that I have read which point to the Ukrainian counteroffensive being both costly in terms of lives lost and slow to regain territory illegally seized by the Orcs.
I mentioned last week that the Orcs launched a missile at a pizza restaurant located in the central business district of Kramatorsk. The number of civilians murdered in that Orc attack has risen to 13 after the well known Ukrainian writer Victoria Amelina succumbed to her injuries. Ms. Amelina was investigating Russian war crimes with the human rights organization Truth Hounds. I view it as likely that the Orcs targeted her with the missile attack. The Russians murdered two teenage twin sisters, Yuliya and Anna Aksenchenko, who were 14, as well. Ukraine novelist and journalist Victoria Amelina killed in Russian missile attack | CBC News Victoria Amelina, the sharp and witty Ukrainian writer whose story must be told | CNN; Kremlin says it only hits 'military infrastructure' after strike against restaurant in Ukraine
Ukrainians Fight Back as Russia Seeks to Appropriate Their Country’s History - WSJ The Orcs have been looting Ukraine's historical artifacts.
Putin critic has theory on why Prigozhin's home got raided - YouTube
Russia Seeds New Surveillance Tech to Squash Ukraine War Dissent - The New York Times These efforts are consistent with Russia's status as a 100% pure authoritarian and Orwellian state. That status will likely never change.
+++
Trump and His Anti-Democracy Party:
Trump pressured Arizona governor after 2020 election to help overturn his defeat; Trump pushed Arizona Gov. Ducey to overturn 2020 election results - The Washington Post It was not the Democrats who tried to steal the 2020 election but Trump and his allies. Trump will routinely claim that others are doing something wrong when he is the only culpable party. Psychologists call that projection. Projection: When Someone Accuses You Of Doing What They’re Doing – Psychopaths In Life Trump is a malignant narcissist and a psychopath. The 'Shared Psychosis' of Donald Trump and His Loyalists - Scientific American
Trump-Appointed Prosecutor Pushes Back on Republicans' Hunter Biden Claims
Trumpsters create their own reality which will never be pierced by accurate information inconsistent with their reality creations.
Trumpsters persistently and loudly booed Senator Lindsey Graham (R-SC) at a Trump rally. Lindsey Graham booed, called ‘traitor’ at Trump rally in his home state - YouTube Since Trump won the republican nomination, no politician has been more servile to Trump than Graham. The Trumpsters do remember that Graham once called Trump a race baiting and religious bigot. Graham: Trump a 'race-baiting, xenophobic religious ... - YouTube; Lindsey Graham Spent Six Years With His Head Up Trump’s Ass for Nothing | Vanity Fair
Inside the House GOP's plan to go after FBI and DOJ - POLITICO The new GOP policy is to weaken the FBI through a variety of measures including budget cuts and a possible impeachment proceeding against the FBI Director Christopher Wray.
The "EXTREMELY STABLE GENIUS" confirms that his mental pathologies run deep, and are incurable, almost on a daily basis:
Trump Truth Social Tweet 7/5/23:
"MASSIVE PROSECUTORIAL MISCONDUCT IS CURRENTLY TAKING PLACE IN AMERICA. THE WEAPONIZATION OF LAW ENFORCEMENT CANNOT BE ALLOWED TO HAPPEN. CRIME & INFLATION ARE RAMPANT, OUR BORDERS ARE OPEN, OUR ELECTIONS ARE RIGGED, OUR ECONOMY IS IN SHAMBLES, OUR ENERGY INDEPENDENCE IS GONE, OUR “LEADER” IS MERCILESSLY MOCKED, & OUR COUNTRY IS BEING DESTROYED BOTH INSIDE & OUT. DO THE PEOPLE OF THIS ONCE GREAT NATION EVEN HAVE A CHOICE BUT TO PROTEST THE POTENTIAL DOOM OF THE UNITED STATES OF AMERICA??? 2024!!!"
Trump Shares Crude Biden Meme In Series Of Unhinged Holiday Rants The republicans want him to serve another 4 years as President. Donald will be their nominee even if he has to hold press conferences and cabinet meetings in a prison cafeteria.
I did not know that the U.S. economy "IS IN SHAMBLES" until Donald informed me. I heard the same assessment parroted by a Trumpster last week.
Trump: "OUR ENERGY INDEPENDENCE IS GONE". U.S. Energy Independence Soars To Highest Level In Over 70 Years- Forbes (5/2/23) If energy independence is defined as importing no crude oil, then the U.S. has not been energy independent for over 75 years. During the Trump administration, "the U.S. imported an average of 9.3 million barrels per day (bpd) of crude oil and finished products per day." A better definition is that the U.S. produces more energy products than it consumes. Last year the U.S. produced 2.5% more energy than the nation consumed. Net energy exports in 2022 rose to the highest level on record. The primary reason for becoming "energy independent" had nothing to do with Trump but the shale revolution which gained momentum during the Trump administration.
Sourced: EIA.pdf In Table 1, the 2022 U.S. energy production was 102,936 quadrillion BTU with consumption at 100,410. In 2020, production was at 95,747.
Weekly U.S. Field Production of Crude Oil (Thousand Barrels per Day)
Marjorie Taylor Greene is not sufficiently wacko for the GOP's "Freedom Caucus" in the House. Marjorie Taylor Greene booted from Freedom Caucus - POLITICO Greene had tried to show she was mentally aligned with that caucus when she claimed that Jewish Space Lasers had caused California's wildfires. Marjorie Taylor Greene Blamed Wildfire on Jewish Space Laser Greene's claim did spark the quick development of a cottage industry that produced and sold Jewish space laser merchandise. Amazon.com: Jewish space laser
Trump-appointed judge gives a 'break' to Jan. 6 rioter at sentencing
+++
1. Small Ball Buys:
A. Added to CFGPRD - Bought 3 at $22.61:
Quote: Citizens Financial Group Inc. Preferred Series D Stock
Issuer: Citizens Financial Group Inc. (CFG)
CFG Analyst Estimates | MarketWatch
Last Discussed: Item # 2.A. Added to CFGPRD at $21.65 (6/10/23 Post)
Fixed-to-Floating Rate Equity Preferred Stock
Average cost per share: $23.47 (10 shares)
Purchase Restriction: Each subsequent purchase must lower my average cost per share.
Par Value: $25
Dividends: Paid Quarterly and non-Cumulative
Last Ex Dividend: 6/20/23
Fixed Coupon: 6.35% to but excluding 4/6/24
Issuer Optional Redemption: On or after 4/6/24 on a dividend payment date.
Yield at AC - Fixed Rate only: 6.764%
Floating Rate: Spread of 3.642% to the 3 month Libor rate or the alternate rate if Libor is discontinued which is the case now.
I mentioned in a comment that CFG announced that the floating rate will be a 3.642% spread to the "three-month CME Term SOFR, as administered by CME Group Benchmark Administration, Ltd. (or any successor administrator), plus a tenor spread adjustment of 0.26161%". Citizens Financial Group, Inc. Announces Transition of U.S. LIBOR-linked Preferred Stock to Term SOFR Replacement Rate | Business Wire The tenor spread is designed to equalize historical LIBOR and SOFR rates. Definition: tenor spread adjustment from 12 USC § 5802(20); Determining Spread Adjustments for SOFR Loans
The 3 month CME Term SOFR rate can be found here: Term SOFR - CME Group
No one knows what the 3 month SOFR rate will be when this preferred stock transitions to the floating rate or what the rate will thereafter be when it resets every 3 months.
If the 3 month SOFR rate was at 5% on the applicable reset date, then the coupon would be 5.26161% (the "base rate") + the 3.642% spread or 8.90361%. Using that assumption for the base rate, the yield would rise to 9.484% based on my current average cost per share.
The preferred stocks that float at spreads to a short term rate can be hedges against persistent problematic inflation that causes the FED to continue raising the FF rate or to maintain it near current levels or higher for far longer than currently contemplated by investors.
The floaters will not work as well as the fixed coupon preferred stocks when short rates significantly decline.
CFGPRD equalization base rate, which renders the floating rate provision equal to the current fixed rate, is a 3 month SOFR of 2.446%. Anything less than that will result in the owner being worse off with the float. (3 month SOFR at 2.446% + .26161% Tenor adjustment + 3.642% spread = 6.35%) Conversing a higher base rate than 2.446% would result in the owner being better off with the float provision.
I use floaters to partially hedge interest rate risk flowing from long term fixed coupon securities.
B. Added to SLRC - Bought 3 at $14.29:
Quote: SLR Investment
Management: External
Cost: $42.87
Investment Category: Monthly Income Generation
2022 Annual Report (risk summary starts at page 24 and ends at page 55)
New Average cost per share: $15.24 (150+ shares)
Last Reported net asset value per share: $18.04 as of 3/31/23
Discount at AC Using $18.04 = 15.52%
Dividend: Monthly at $.13666 per share ($1.64 annually)
SLR Investment Corp. (SLRC) Dividend History | Seeking Alpha
I am reinvesting the dividend.
Yield at New AC : 10.76% (regular dividend only)
Last Ex Dividend: 6/16/23
Last Discussed: Item # 2.H. Added to SLRC - Bought 3 at $14.39 (6/17/23 Post) I discussed the last earnings report in that post. SEC Filed Press Release I have nothing further to add here.
Goal: Any total return before any ROC adjustment to the tax cost basis in excess of the dividend payments
SLRC Realized Gains to Date: $166.75
C. Added to QYLD - Bought 2 at $17.55:
Quote: Global X NASDAQ-100 Covered Call ETF Overview
Cost $35.1
Sponsor's website: Nasdaq 100 Covered Call ETF
Global X NASDAQ 100 Covered Call ETF (QYLD)-Morningstar (Currently rated 3 stars)
Expense Ratio: .6%
Last Discussed: Item # 2.I. Added to QYLD - Bought 5 at $17.8 (6/17/23 Post)
Investment Category: Monthly Income Generation
Average cost per share: $18.16 (61+ shares)
Dividend: Monthly at a variable rate
Last 12 Dividends: $2.04 per share
Yield at AC Using $2.04 Annual Rate = 11.23%
Last Ex Dividend: 6/20/23
Goal: Any total return before any ROC adjustments to the tax cost basis in excess of the dividends paid.
D. Added 6 SBSI at $26.22:
Quote: Southside Bancshares
Cost $157.38
"Southside Bancshares, Inc. is a bank holding company with approximately $7.79 billion in assets as of March 31, 2023, that owns 100% of Southside Bank. Southside Bank currently has 55 branches in Texas and operates a network of 73 ATMs/ITMs."
Southside Bank - Corporate Profile
Last Discussed: Item # 1.D. Sold 1 SBSI at $39.8(4/1/2021 Post)
Last Buy Discussion: Item # 1.E. Added to SBSI - Bought 1 at $24.5; 1 at $23.88 (10/17/20 Post)
Investment Category: Regional Bank Basket Strategy
Average cost per share: $26.14 (20 shares)
Dividend: Quarterly at $.35 per share ($1.4 annually), last raised from $.34 effective for the 2023 first quarter.
Southside Bancshares, Inc. (SBSI) Dividend History | Seeking Alpha
Historically, SBSI has paid a special variable dividend in the 4th quarter. The 2022 special dividend was $.04 per share. The range has been $.02 to a high of $.33 in 2012.
Yield at New AC: 5.356%(regular dividend only)
If I assumed a 4 cent annual special dividend, paid regularly, the yield rises to 5.51%.
Last Ex Dividend: 5/22/23
Last Earnings Report (Q/E 3/31/23): SEC Filing
Comparisons are to the 2022 first quarter.
Net Income: $26.034M, up from $24.996M
Diluted E.P.S. $.83, up from $.77
Consensus at $.79 per Fidelity
NIM: 3.21%, down from 3.22%
It is a positive IMO that NIM has remained steady even though funding costs (deposit and borrowings) were far higher in the 2023 first quarter compared to the 2022 first quarter.
Efficiency Ratio: 50.99%, up from 48.15%
NPL Ratio: .08% (non-performing loans to total loans)
NPA Ratio: .04% (non-performing assets to total assets)
Charge off ratio: .03%
The NPL, NPA and Charge Off ratios are excellent.
Coverage Ratio: 1,146% (allowance already set aside for credit losses to NPLs)
ROTE: 19.36%, up from 15.2%
Total Capital Ratio: 16.28%
Tangible Book Value per share: $17.54, down from $17.86
Investment Securities:
 |
| In Thousands, page 13 |
Deposits: SBSI reduced the amount of brokered deposits since borrowings from the FHLB provides a cheaper source of funding.
 |
| Page 42 |
Other Sell Discussions: Item # 2 Sold 100 SBSI at $21.53 (6/28/12 Post); Item # 2.B. Sold 50 SBSI at $21.27 (4/29/13 Post); Item # 3 Sold 107+ SBSI at $20.5 (7/18/11 Post)
SBSI Realized Gains to Date: $400.34
Most of that total was realized in 2011 and 2012 = $305.74
E. Added to GOODN - Bought 10 at $18.25:
Quote: Gladstone Commercial Corp. 6.625% Preferred Series E (GOODN)
Issuer: Gladstone Commercial Corp. (GOOD)-Externally managed equity REIT
SEC Filed Financial Report for the Q/E 3/31/23 (core FFO at +$14.988M; GAAP Loss at $735,000).
The monthly common stock dividend was reduced from $.1254 to $.10 effective for the January 2023 payment. Gladstone Commercial Corporation (GOOD) Dividend History | Seeking Alpha; Gladstone Commercial Corporation Announces Monthly Cash Distributions for January, February and March 2023 I own GOOD in multiple accounts and may eliminate 1 or more positions.
The preferred dividend can not be cut outside of a bankruptcy proceeding but may only be deferred after the cash common share dividend is eliminated and no cash is used to buy common stock.
Last Discussed: Item # 1.A. Added to GOODN - Bought 5 at $18.7; 5 at $18.3; 5 at $17.86; 5 at $17.3 (4/29/23 Post)
Investment Category: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks, a subcategory of Equity REIT Common and Preferred Stock Basket Strategy
Par value $25
Dividends: Paid Monthly, non-qualified and Cumulative
AC per share: $18.38 (40 shares)
Yield at New AC: 9.01%
Last Ex Dividend: 6/20/23
On an annual basis, this REIT will release tax information regarding the dividend payments for both the common and preferred stocks. For the 2022 common share dividends, 70.4% was classified as a return of capital.
There was no ROC assorted with the preferred stock dividends:
Purchase Restriction: 5 or 10 share lots with each subsequent purchase required to reduce my average cost per share.
F. Added to DEA - Bought 4 at $14.59:
Quote: Easterly Government Properties Inc. (DEA)
Cost: $58.36
Just averaging down here whenever the spirit moves me.
Properties | Easterly Government Properties, Inc.
DEA 2022 SEC Filed Annual Report
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
New AC per share: $17.28 (140+ shares)
Dividend: Quarterly at $.265 per share ($1.06 annually)
Easterly Government Properties, Inc. (DEA) Dividend History | Seeking Alpha
Yield at AC: 6.134%
Last Ex Dividend: 5/10/23
Last Discussed: Item # 2.K. Added to DEA - Bought 5 at $14.54 (6/17/23 Post) I discussed the first quarter report in that post and have nothing further to add here. SEC Filed Press Release
DEA Realized Gains to Date: $561.24
Largest Gain: Item # 1.A. Sold 21+ DEA at $28.81 (6/6/20 Post)(profit snapshot = $272.36)
G. Added to ICMB - Bought 10 at $3.65:
Quote Investcorp Credit Management BDC Inc. Overview - Externally Managed BDC
Cost: $36.5
Website: Investcorp Credit Management BDC, Inc.
Investment Category: Lottery Ticket Basket
Last Reported net asset value per share: $6.13 as of 3/31/23, down from $6.35 as of 12/31/22
New Average cost per share: $4.62 (150+ shares)
Dividend: Quarterly at $.13 per share ($.52 annually)
Investcorp Credit Management BDC, Inc. (ICMB) Dividend History | Seeking Alpha
Special dividends have been paid in the past.
I am reinvesting the dividend as part of my ongoing effort to dig myself out of the hole, ignoring for now the first law of holes. The First Rule of Holes
Yield at New AC: 11.26% (regular dividend only)
Yield at $3.65: 14.25% (regular dividend only)
Last Ex Dividend: 6/15/23 (owned 140+ as of)
Dividend History Rating: Poor
Last Discussed: Item # 2.J. Added to ICMB - Bought 10 at $3.9; 10 at $3.79 (6/17/2023 Post)
Last Substantive Discussion: Item # 2.K. Added to ICMB - Bought 3 at $3.92 (6/10/23 Post) I discussed the last earnings report in that post and have nothing further to add here. Investcorp Credit Management BDC, Inc. Announces Financial Results for the Quarter Ended March 31, 2023, and Quarterly and Supplemental Distributions
H. Added to MATV - Bought 3 at $14.14:
Quote: Mativ Holdings Inc. (MATV)
Cost: $42.42
MATV Analyst Estimates | MarketWatch
New Average Cost per share: $16.67 (25+ shares)
Dividend: Quarterly at $.40 per share
Yield at New AC : 9.6%
Yield at $14.14: 11.32%
Last Ex Dividend: 5/25/23 (owned 20 as of)
As previously discussed, I am expecting the dividend to be slashed, unless there is an immediate and significant increase in earnings. The last earnings reports have been disappointing. For the 2023 first quarter, non-GAAP E.P.S. was reported at $.25. A quarterly dividend of $.40 per share would be justified and prudent IMO with quarterly non-GAAP E.P.S. near $.80. A cut to $.10 would be prudent with quarterly E.P.S. running near $.25.
Last Discussed: Item # 1.E. Added 2 MATV at $14.62 (7/1/23 Post)
I discussed the last earnings report in this post: Item # 1.E. Added 5 MATV at $15.5 (6/3/23 Post), SEC Filed Earnings Press Release for the Q/E 3/31/23 Management believes results will improve as the year progresses, but that is not something that I am willing to accept at the moment and neither are the Stock Jocks given the current price and strong bear market trend.
But, if results dramatically improve in the second quarter with an optimistic vibe given off by management, there is also room to run on the upside given the really gloomy outlook reflected in the stock price.
Last Eliminations: Item # 3.A. Eliminated MATV - Sold 30 at $27.97 (2/27/23 Post); Item # 5.C. Eliminated MATV in Schwab Account - Sold 18+ at $25.06 and Item #5.D - Pared MATV in Fidelity Account - Sold 15 at $26.05 (1/23/23 Post)
MATV Realized Gains to Date: $316.5
2. Small Ball Sells:
I am eliminating some small ball positions that have not performed well and have relatively low dividend yields.
A. Eliminated PCH - Sold 5 at $53.3:
Proceeds: $266.5
Quote: PotlatchDeltic Corp. (PCH)
"PotlatchDeltic (Nasdaq: PCH) is a leading Real Estate Investment Trust (REIT) that owns nearly 2.2 million acres of timberlands in Alabama, Arkansas, Georgia, Idaho, Louisiana. Mississippi and South Carolina. Through its taxable REIT subsidiary, the company also operates six sawmills, an industrial-grade plywood mill, a residential and commercial real estate development business and a rural timberland sales program."
I owned another timber REIT, CTT, that was acquired by PCH. PotlatchDeltic and CatchMark (CTT) to Combine to Create a Leading Integrated Timber REIT; PotlatchDeltic and CatchMark Complete Merger (9/14/22) I sold my CTT after the acquisition announcement and before it was completed.
SEC Filed Investor Presentation (5/23)
Investment Strategy: Equity REIT Common and Preferred Stock Basket Strategy
Profit Snapshot: +$7.5
Dividend: Quarterly at $.45 per share
Last Ex Dividend: 6/1/23
Last Earnings Report (Q/E 3/31/23): SEC Filing
B. Eliminated JEF - Sold 5 at $33.25:
Quote: Jefferies Financial Group Inc. (JEF)
The last earnings report was awful.
JEF Analyst Estimates | MarketWatch
Proceeds: $166.34
Profit Snapshot: +$17.83
E.P.S. = $.05, down from $.46
My original cost tax basis was slightly reduced by the spin out of the Vitesse Energy Inc. (VTS) shares that were owned by JEF. Owners of JEF received 1 share of VTS for every 8.49668 JEF shares owned on the ex distribution date. SEC Filing
As a result of this spinoff, my cost basis in JEF was reduced from $31.02 to $29.7. Item # 3.J. Bought 5 JEF at $31.02 (7/27/22 Post) The realized gain on the VTS fractional share was $2.08.
C. Eliminated BAC - Sold 5+ at $28.75:
Quote: Bank of America Corp. (BAC)
Proceeds: $145.33
The incompetence of BAC's interest rate risk management for owned securities has now resulted in my total lack of interest. When coupled with the relatively low dividend yield, and extremely poor dividend history, I decided that I would just move on.
10-Q for the Q/E 3/31/23 at page 57
 |
| In Millions |
Profit Snapshot: $28.75
Last Buy Discussion: Item # 1.J. Started BAC - Bought 2 at $25.61, 1 at $25.28; 1 at $25.28; 1 at $23.97; 2 at $23.7; 1 at $23.31 (9/26/20 Post) I later sold the highest cost 2 shares. Item # 2.L. Pared BAC - Sold 2 at $27.41 (12/12/20 Post)
Dividend: Quarterly at $.22 per share.
Bank of America Corporation (BAC) Dividend History | Seeking Alpha
Subsequent to my sale, BAC raised its dividend to $.24 per share. Bank of America Announces Plan to Increase Quarterly Dividend 9 Percent to $0.24 per share
Dividend History: Poor
The quarterly dividend was at $.64 per share in 2008 third quarter but was slashed to $.32 for the 4th quarter and then slashed to $.01. The quarterly 1 cent rate was kept in effect until the 2014 when the dividend was raised to $.05. The rate was inched up in subsequent years to the current rate.
Last Ex Dividend: 6/1/23
Last Earnings Report (Q/E 3/31/23):
SEC Filed Earnings Press Release and Supplemental
E.P.S. $.94, up from $.8 in the 2022 first quarter
Efficiency Ratio: 61.84%
ROTE 17.4%
Charge off ratio: .32% ($807M)
Tangible Book value per share: $22.78
3. Corporate Bonds: $8,000 in principal amount
A. Bought 2 Kilroy Realty LP 3.45% SU Maturing on 12/15/24 at a Total Cost of 95.004:
Issuer: Operating entity for the REIT Kilroy Realty Corp. (KRC) who guarantees the note.
Management: Internal
2022 Annual Report (SU listed at page F-36. This SU note is the next one to mature)
SEC Filed Earnings Press Release for the Q/E 3/31/23 ("As of March 31, 2023, Kilroy’s stabilized portfolio totaled approximately 16.2 million square feet of primarily office and life science space that was 89.6% occupied and 91.6% leased. The company also had more than 1,000 residential units in Hollywood and San Diego, which had a quarterly average occupancy of 93.4%. In addition, the company had two in-process life science redevelopment projects with total estimated redevelopment costs of $80.0 million, totaling approximately 100,000 square feet, and three in-process development projects with an estimated total investment of $1.7 billion, totaling approximately 1.7 million square feet of office and life science space.")
Properties - Kilroy Realty The San Francisco properties are probably driving some price decline of the SU debt.
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa2/BBB
YTM at Total Cost: 7.136%
Current yield at TC = 3.63%
I now own 4 bonds.
Last Bond Offering (9/21): Prospectus ($450M of 2.65% SU Maturing in 2033)
B. Bought 2 AON 3.5% SU Maturing on 6/14/24 at a Total Cost of 97.904:
%203.5%25%20SU%206:14:24.png)
Issuer: Aon PLC (AON)
AON Analyst Estimates | MarketWatch
10-Q for the Q/E 3/31/23 (net income of $1.05B)
I am replacing the 2 AON 4% SU bonds that mature on 11/17/23 ahead of their redemption.
New Finra Page: Bond Page | FINRA.org
Prospectus (guaranteed by Aon Corporation)
Credit Ratings: Baa2/A-
YTM at Total Cost: 5.817%
YTM at Purchase Price: 5.929%
Current Yield at TC = 3.575%
I now own 4 bonds.
Last Bond Offering (2/23): Prospectus ($750M of 5.35% SU maturing in 2033)
C. Bought 2 Dollar General 4.25% SU Maturing on 9/20/24 at a Total Cost of $98.269:
%209:20:24%20.png)
Issuer: Dollar General Corp. (DG)
DG Analyst Estimates | MarketWatch
SEC Filed Earnings Press Release for the F/Q ending 5/5/23 (net income of $514.38M)
New FINRA Page: Bond Page | FINRA.org
Credit Ratings: Baa2/BBB
YTM at Total Cost: 5.75%
Current Yield at TC = 4.325%
Last Bond Offering (6/23): Prospectus
In the "Use of Proceeds" section, DG states that it intends to use some proceeds to pay down short term commercial paper debt.
D. Bought 2 Synchrony Financial 4.375% SU Maturing on 3/19/24 at a Total Cost of 98.527:
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Issuer: Synchrony Financial (SYF)
SYF Analyst Estimates | MarketWatch
SYF SEC Filed Earnings Release for the Q/E 3/31/23 (net income of $601M, down from $922M in the 2022 first quarter, due to increases in interest expenses, credit loss reserve build, and charge offs
New FINRA Page: Bond Page | FINRA.org
Credit Rating: BBB- by S&P and Fitch.
Credit Rating Summary | Synchrony Financial
Fitch Affirms Synchrony Financial at 'BBB-'; Outlook Revised to Positive (4/21/23)
YTM at Total Cost: 6.55%
Current Yield at TC = 4.44%
My decision to nibble was in part due to this SU bond being the first to mature and its short maturity date:
List of SU Bonds as of 3/31/23:
4. Treasury Bills Purchased at Auction:
A. Bought 3 Treasury Bills at 7/3/23 Auction-Schwab Account:
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Matures on 10/5/23
91 Day Bill
Interest $39.66
Investment Rate: 5.388%
B. Bought 2 Treasury Bills at 7/6/23 Auction-Schwab Account:
56 Day Bill
Matures on 9/5/23:
Interest: $24.27
Investment Rate: 5.33%
5. CDS - FDIC Insured:
A. Bought 1 Wells Fargo 5.4% CD Maturing on 1/7/25:
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Interest Paid Quarterly.
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.
