Economy:
The BLS reported last Friday that the economy added 263,000 jobs last month. The consensus estimate was at 200,000. The unemployment rate was unchanged at 3.7%. Average hourly earnings spiked by 16 cents, or .6%, which spooked investors. Over the past year through November, wages were up 5.1%, significantly above the 4.5% estimate. The average work week declined .1 hour to 34.5 hours which is roughly equivalent to 250,000 jobs. Job gains for September and October were revised down by 23,000. Employment Situation Summary - 2022 M11 Results The U-6 number was reported at 6.7%, down from 6.8% in October. Table A-15. Alternative measures of labor underutilization - 2022 M11 Results
Discussed at Jobs report November 2022: Payrolls and wages blow past expectations and flying in the face of Fed rate hikes
In its second estimate for 3rd quarter GDP growth, the government revised its estimate to an annual rate of 2.9% compared to 2.6% in the first estimate. Gross Domestic Product (Second Estimate) and Corporate Profits (Preliminary), Third Quarter 2022 | U.S. Bureau of Economic Analysis (BEA)
The current estimate is that PCE rose 1.7% in the third quarter:
The November ISM manufacturing decreased to 1.2 to 49. Any number below 50 indicates an ongoing contraction. The new orders component declined to 47.2 from 49.2 in October.
Personal Income and Outlays, October 2022 | U.S. Bureau of Economic Analysis (BEA):
October 2022 Pending Home Sales Decline as Qualifying for a Home Becomes More Difficult
Is the Housing Market Headed for a Big Crash? What's Ahead for Real Estate. - Barrons
Yesterday was a particularly bad day for regional bank stocks. The SPDR S&P Regional Banking ETF (KRE) declined 5% to close at $60.75. The S & P fell 1.79%. I did not see any news that would explain the bank sector's decline. My best guess is that this sector can produce an early warning signal for a recession developing soon.
Jamie Dimon says inflation eroding consumer wealth may cause recession next year
The next FED meeting is on 12/14. The current probability remains 100% of at least a 50 basis point increase. The odds of a 75 basis point has ticked down some to 20.6%.
+++
Putin and His Country:
Russia will never be reformed into a democracy and will remain indefinitely a hostile nuclear power governed by violent psychopaths, autocrats and kleptocrats. A super majority of Russians support a totalitarian government with no checks or balances on its Dear Leader. No other conclusion is possible given its history.
Vlog 118: War in Ukraine. Why Russians worship Putin? - YouTube
'Putin has failed tactically and his military are performing pretty abysmally' | Admiral Lord West - YouTube The Russian military has only proven its prowess when attacking apartment buildings, hospitals, schools, homes, civilian infrastructure, and other civilian structures with long range missiles and artillery shells.
Putin has failed more than tactically with his invasion.
Putin has caused irreparable damage to Russia's economy and has consequently weakened Russia for several generations. Russia’s Economy Is Threatened by War and Sanctions - The New York Times; Russia's Economy is Being Slowly Asphyxiated
Western companies that have left Russia will likely never return. Significant losses were taken by them on their Russian interests. If they returned, it is a 100% certainty that Russia will do something else that will cause them to leave, writing down their investments once again. Russia is just not worth the trouble and never will be.
Russian companies and the Russian government will be denied access to western capital. This will last for a very long time.
Tens of thousands of Russians will lose their lives fighting Putin's war in Ukraine, or suffer lifelong disabilities. Ukraine claims that almost 100,000 Russian soldiers have been killed in action.
Russia is unlikely to conquer Ukraine and has no exit strategy from the war that it initiated.
Europe will substantially reduce purchases of Russian products, potentially ending its reliance on Russian oil and gas altogether.
Sweden and Finland have joined NATO in response to Russian military aggression.
Russia's influence over its central asian allies has weakened substantially as those nations strengthen ties with the west. Setbacks in Ukraine war diminish Russia’s clout with regional allies - The Washington Post
While it was difficult for Russia to further damage its already bad reputation throughout the free world, Putin has found a way to do so.
And, there are no benefits to Russia from its invasion.
NATO has never threatened to invade Russia. NATO exists to deter Russia from invading its members and that is a real rather than an imagined threat. Russia has only united NATO countries and made it stronger.
Russia has also managed to unite Ukrainians in their hatred of Russia which will last for generations and render the country ungovernable by Russia in the event the invasion becomes successful.
And, Russia has done nothing positive for Russian speaking Ukrainians. Russia has succeeded only in murdering those people, destroying their homes and businesses, disrupting their lives and making life miserable for them.
Russia says it is willing to start negotiations for a peaceful settlement provided Ukraine first acknowledges that the recently illegally annexed territories and Crimea are part of the Russian federation. Other demands must be met including amending the Ukrainian constitution prohibiting that nation from joining NATO Russia: West Must Recognize Its Vast Claims Over Ukraine Before Talks Once Ukraine accepts those terms, Russia will start negotiating its other peace demands. The war in Ukraine will continue until Putin and his followers are removed from their positions of power which is highly unlikely.
Vladimir Putin demands annexations recognised before talks with US president Joe Biden - BBC News - YouTube The U.S., of course, will never recognize those clearly illegal annexations of internationally recognized Ukrainian territory.
When reading comments made by Putin, the first words that comes to mind when describing him are "violent psychopath". The second is "warped" and pervasively so. The German chancellor Olaf Scholz wasted one hour of his time trying to reason with Russia's dictator. Putin rejects diplomatic solution in phone call with Olaf Scholz | DW News - YouTube
E.U. proposes war crimes tribunal for Russia Ukraine invasion - The Washington Post; EU President's statement on Russian accountability
Russia Just Made Talking About the War a Crime - YouTube
How can any Christian accept someone like Patriarch Kirill, a former KGB agent and a fervent supporter of Putin's wars, as a church leader? Russian Patriarch Kirill Says Dying In Ukraine 'Washes Away All Sins'; Ukraine bans religious organizations with links to Russia - ABC News Other Eastern Orthodox churches located outside of Russia need to sever their connections with the Russian Orthodox church, as the autocephalous church of Ukraine did in January 2019, which was approved by Bartholomew I, leader of the Eastern Orthodox church. Russian Orthodox Church | History & Facts | Britannica
Russian Soldier Says Commander Stabbed Ukrainian Woman To Death - YouTube
Explosions rock Russian military airbases; new strikes hit Ukraine In Putin's mind, it is simply intolerable for Ukraine to strike a Russian military base or a military supply route from Russia to Ukraine while it is okay for Russia to destroy Ukrainian civilian infrastructure, hospitals, schools, apartment buildings, homes and other civilian structures.
+++
Trump and His Party:
Trump wants to delete the Constitution, which is not a surprising development. Trump: Constitution should be terminated due to "massive" election fraud; Trump calls for the termination of the Constitution in Truth Social post Demagogue Don has been and continues to be the most powerful threat to America's Democracy.
The end to Democracy is warranted in Trump's America because of some internal Twitter emails released by Donald's soulmate Elon Musk which show no election fraud. Instead, there was an internal debate among Twitter employees whether access to a N.Y. Post story relating to Hunter Biden's laptop needed to be limited. For 1 day, the link was restricted due to a Twitter policy involving hacked and stolen materials. The remedy in Trump's America is (1) to throw out the 2022 election results and then declare Donald as the nation's current President or (2) to hold another election.
Trump: “Do you throw the Presidential Election Results of 2020 OUT and declare the RIGHTFUL WINNER, or do you have a NEW ELECTION? A Massive Fraud of this type and magnitude allows for the termination of all rules, regulations, and articles, even those found in the Constitution.”
Trump's call to suspend Constitution not a 2024 deal-breaker, leading House Republican says - ABC News This is what I would expect a republican to say.
Trump suggestion of ‘termination’ of Constitution draws few GOP rebukes - The Washington Post
Musk did manage to anger the remaining Twitter employees by allowing the disclosure of the names and addresses of Twitter employees involved in those internal communications. Threats against them soon followed as Musk had to know. Elon Musk’s promised Twitter exposé on the Hunter Biden story is a flop that doxxed multiple people - The Verge
The GOP is planning to intimidate and smear witnesses who testified before the January 6th committee. Kevin McCarthy reveals how the GOP House will protect Trump - The Washington Post This is to be expected from them.
Trump expresses solidarity with Jan. 6 rioters who stormed the Capitol - The Washington Post, republished at MSN.Com Trump expresses solidarity with Jan. 6 rioters who stormed the Capitol
Masked Kanye West praises Hitler in Alex Jones interview - The Washington Post
Another recent Trump dinner guest at his Mar-A-Lago Cathedral where pilgrims come to worship him, was filmed throwing a sprite at another patron at a burger joint. Nick Fuentes Throws Drink At Couple at In-N-Out Burger During Food Fight
3 republican appointed appellate court judges (2 appointed by Trump) reversed the Trump appointed federal district court judge Aileen Cannon's decision to appoint a special master. The decision by Cannon was frivolous and had no basis in law. Court ends specialmaster review of Trump's Mar-a-Lago records
Hate Speech’s Rise on Twitter Under Elon Musk Is Unprecedented, Researchers Find - The New York Times; Hate speech is soaring on Twitter under Elon Musk, report finds - The Verge; Hate speech spikes on Twitter amid Elon Musk, Ye controversies; Antisemitic accounts on Twitter can lead to real world violence, officials warn - The Washington Post Musk apparently views hate speech from self-proclaimed "conservatives" as worthy of mass dissemination. I do not see how companies can continue to advertise on Twitter other than "My Pillow" and similar ilk.
The lawyers for Kari Lake and Mark Finchem, neither of whom has conceded, have been sanctioned by a federal court judge for filing frivolous election related lawsuits. Kari Lake’s Counsel Sanctioned for False Claims in Election Suit; Judge rips Lake, Finchem lawsuit on voting machines, orders sanctions
Republicans and like minded people elsewhere will prevent meaningful efforts to prevent catastrophic climate change. How we can keep global warming below the 1.5 degrees Celsius goal - Washington Post
Manhattan DA hires former DOJ official who previously investigated Trump Foundation - ABC News; Donald J. Trump Pays Court-Ordered $2 Million For Illegally Using Trump Foundation Funds Don the Con used this charity as a personal piggy bank.
Jury begins deliberations in Trump Organization criminal fraud trial - ABC News The Trump Organization is accused of committing tax fraud for paying personal expenses of some employees, including its long time CFO Allen Weisselberg who pleaded guilty to criminal tax evasion, and then failing to report those payments as income. The legal issue is whether the prosecution proved beyond a reasonable doubt that such payments were "on behalf of" the Trump Organization rather than to solely advance their own personal interests. The key issue is whether Trump knew enough about the scheme that he authorized it. The purpose was for the Trump Organization to avoid paying employee payroll taxes.
++++
Allocation Shifts Discussed in this Post:
Corporate Bonds, Treasuries, CDs: +$38,000
Common Stocks: -$2,929.52
(consisting of $3,509.62 in proceeds minus $580.1 in purchases)
Exchange Traded First Mortgage Bond: +$217 with weighted average yield of 5.645%.
Common Stock Realized Gains: +$1,045,85
+++
1. Investment Grade Corporate Bonds: +$17,000
I am now caught up in discussing my corporate bond purchases.
Over the next few months, 80+% of the proceeds from maturing treasury bills and corporate bonds will be redirected into treasury bill auction purchases.
I am near my saturation point with corporate bonds.
A. Bought 1 Potomac Electric 3.6% First Mortgage Bond Maturing on 3/15/24 at a 97.836 Total Cost:
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Issuer: Wholly owned subsidiary of Exelon Corp. (EXC)
EXC SEC Filed Earnings Press Release for the Q/E 9/30/22
EXC 10-Q for the Q/E 9/30/22 (see pages 35-39 for Potomac Electric results)
Finra Page: Bond Detail (prospectus linked)
Credit Ratings: A2/A
Security: First Mortgage
YTM at Total Cost: 5.193%
Current Yield at TC = 3.6796%
I now own 3.
B. Bought 2 Union Electric 3.5% First Mortgage Bonds Maturing on 4/15/24 at a Total Cost of 97.595:
Purchased 11/3/22.
Issuer: Wholly owned subsidiary of Ameren Corp. (AEE)
AEE Analyst Estimates | MarketWatch
AEE SEC Filed Earnings Press Release for the Q/E 9/30/22
AEE 2021 Annual Report (Union Electric 2021 results start at page 90)
Security: First Mortgage Bond
Finra Page: Bond Detail (prospectus linked)
Credit Ratings: A2/A
YTM at Total Cost = 5.2555%
Current Yield at TC = 3.5862%
C. Bought 2 Nextera Capital 2.94% SU Maturing on 3/21/24 at a Total Cost of 96.85:
%202.94%25%203:21:2024%20.png)
Issuer: Wholly owned subsidiary of NextEra Energy Inc. (NEE), who guarantees the notes.
NEE SEC Filed Earnings Press Release for the Q/E 9/30/22
Finra Page: Bond Detail (prospectus not linked)
Prospectus (offered at 99.994 in March 2022)
Credit Ratings: Baa1/BBB+
Fitch has an A- rating. Financial Strength – NextEra Energy, Inc.
YTM at Total Cost: 5.353%
Current Yield at TC = 3.0356%
I now own 16 bonds.
D. Bought 1 Nextera Capital 4.255% SU Maturing on 9/1/24 at a Total Cost of 98.043:
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Purchased 11/4/22
Issuer: Wholly owned subsidiary of NextEra Energy Inc. (NEE) who guarantees the notes.
YTM at Total Cost: 5.398%
Current Yield at TC = 4.34%
E. Bought 2 Fifth Third Bancorp 4.3% Junior Bond Maturing on 1/16/24 at a Total Cost of 99.254:
%201:16:24%204.3%25.png)
Issuer: Fifth Third Bancorp (FITB)
I own the common stock.
FITB Analyst Estimates | MarketWatch
SEC Filed Earnings Press Release for the Q/E 9/30/22 (net income of $631M)
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings: Baa1/BBB
YTM at Total Cost = 4.962%
Current Yield at TC : 4.33%
F. Bought 2 Eversource 3.8% SU Maturing on 12/1/23 at a Total Cost of 98.781:
%203.8%25%2012:1:23%20.png)
Issuer: Eversource Energy (ES)
ES Analyst Estimates-MarketWatch
SEC Filed Earnings Press Release for the Q/E 9/30/22
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings: Baa1/BBB+
YTM at Total Cost = 5.02%
Current Yield at TC = 3.8469%
This is my first purchase of this ES bond. I own 4 ES 4.2% SU bonds maturing on 6/27/24 and 4 ES 3.15% SU bonds maturing on 1/15/25. I also 2 first mortgage bonds issued by Public Service Company of New Hampshire, an ES subsidiary, that mature in November 2023. Bond Detail Another ES subsidiary, Connecticut Light and Power, issues first mortgage bonds, but I have not yet bought 1 of those. The only one under consideration for a purchase is the 3.2% maturing in 2027. I need a lower price before seriously considering a purchase.
F. Bought 1 Royal Bank of Canada 5.25% SU Maturing on 12/29/23 at par value:
%2012:29:23%20.png){kind=small}
Issuer: Royal Bank of Canada (RY)
RY Analyst Estimates | MarketWatch
Fidelity Notes Program Purchase.
Interest Paid Quarterly
Credit Ratings: A1/A
Current Yield: 5.25%
G. Bought 1 Royal Bank of Canada 5.4% SU Maturing on 5/30/24 at Par Value:
%205:30:24.png){kind=small}
See Item #1.F. Above.
Fidelity Notes Program Purchase
Interest Paid Quarterly
Current Yield: 5.4%
H. Bought 2 Willis North America 3.6% SU Maturing on 5/15/24 at a Total Cost of 97.39:
%203.6%25%205:15:24.png)
I now own 4. Purchased 11/28/22.
Issuer: Willis Towers Watson PLC (WTW) guarantees the notes.
WTW Analyst Estimates | MarketWatch
WTW SEC Filed Earnings Press Release for the Q/E 9/30/22 (net income of $192M, adjusted to $243M)
10-Q (debt listed and discussed starting at page 24). This 2024 SU is the next one that matures.
Last Bond Offering (May 2022): Prospectus for $750M SU Maturing in 2027; Finra Bond Detail
Finra Page: Bond Detail (prospectus not linked)
Credit Ratings: Baa3/BBB
YTM at Total Cost: 5.485%
Current Yield at TC = 3.6965%
I. Bought 1 Black Hills 3.95% SU Maturing on 1/15/26 at a Total Cost of 96.505:
Issuer: Black Hills Corp. (BKH)-Utility Holding Company
I have eliminated my position in the common stock.
BKH Analyst Estimates | MarketWatch
SEC Filed Earnings Press Release for the Q/E 9/30/22
FINRA Page: Bond Detail (prospectus not linked)
Credit Ratings: Baa2/BBB+
YTM at Total Cost: 5.175%
Current Yield at TC = 4.0931%
I now own 4 including 1 in a RI account.
J. Bought 2 Kilroy Realty LP 3.45% SU Maturing on 12/15/24 at a Total Cost of 95.604:
%203.45%25%2012:15:24.png)
Issuer: Wholly owned operating subsidiary of Kilroy Realty Corp. (KRC) who guarantees the notes:
Finra Page: Bond Detail (prospectus not linked)
KRC SEC Filed Supplemental Earnings Report for the Q/E 9/20/22
KRC 10-Q for the Q/E 9/30/22 (debt discussed starting at page 14)
Last Bond Offering (9/2021): Prospectus for $450M 2.65% SU maturing in 2033.
Credit Ratings: Baa2/BBB
YTM at Total Cost: 5.778%
Current Yield at TC = 3.556%
2. CDs - FDIC Insured: +$9,000
A. Bought 2 Merrick Bank 4.85% CDs Maturing on 12/9/24:
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Interest Paid Monthly.
B. Bought 2 Manufacturers & Traders Trust 4.9% CDs Maturing on 12/9/24:
.png){kind=small}
Issuer: Operating bank for M&T Bank Corp. (MTB)
I have eliminated my stock position in MTB.
Interest Paid Semiannually.
C. Bought 2 First Citizens 4.85% CDs Maturing on 11/30/22:
%204.85%25%2011:30:22.png)
Interest Paid Semiannually.
D. Bought 2 Bridgewater Bank 4.75% CDs Maturing on 11/14/23:
%204.75%25%20CDs%2011:14:23%20MI%20.png){kind=small}
Interest paid monthly.
Bridgewater Bank Reviews and Rates - Minnesota (A+ health rating)
E. Bought 1 UBS Bank 4.85% CD Maturing on 6/7/24:
%206:7:24%20MI%20.png){kind=small}
Interest paid monthly.
3. Treasury Auction Purchases: +$12,000
A. Bought 2 Treasury Bills at 11/29/22 Auction:
%2011:30:23.png){kind=small}
Priced at 95.3944
1 Year Bills
Mature on 11/30/23
Interest: $92.11
Investment Rate (coupon equivalent): 4.784%
B. Bought 10 Treasury Bills at 12/5/22 Auction:
%203:9:23.png){kind=small}
91 Day Bill
Bought at 98.9206
Interest: $107.94
Matures on 3/9/23
Investment Rate (coupon equivalent): 4.377%
4. Small Ball Sells:
Over the past several years, I have used a spike in the VIX above 30 as a timing indicator to buy stocks. A move back closer to 20 and then below is a timing indicator for selling the dollar value added during the VIX spike.
The pattern is described as an Unstable Vix Pattern (UVP) in my Vix Asset Allocation Model. Vix Asset Allocation Model Explained Simply With as Few Words as Possible (5/17/2009); Vix Asset Allocation Model | Seeking Alpha
The stock market is currently in a UVP that formed in March 2020.
CBOE Volatility Index-St. Louis Fed
The proceeding VIX chart starts in September 2019 and shows a Stable Vix Pattern, defined as longer movement below 20, prior to March 2020 which was a Trigger Event in the Model that created the current UVP.
My trading becomes very hyper during a UVP. I am more inclined to hold stock positions longer during a SVP, marked by longer term movements below 20 that can last for several years.
So far that has worked and will continue to work until it doesn't.
I do not have any financial reason to invest in stocks now, but I am nonetheless attempting to increase my income through dividends and capital gains. The annual goal for those income sources is $40,000+. Even during volatile periods for stocks and a bear market, I will generally own 200 to 300 stocks which I view now as inventory to be profitably sold at some point.
The VIX did close below 20 last Thursday and Friday but popped above that level yesterday. The prior close below 20 was on 8/18/22. CBOE Volatility Index (^VIX) Historical Data - Yahoo Finance
A. Eliminated SJI in Fidelity and Vanguard Accounts- Sold 15+ at $35.16; 5 at $35.16:
Quote: South Jersey Industries Inc. (SJI)
Proceeds: $705.67
SJI Analyst Estimates | MarketWatch
Last Buy Discussion: Item # 3.A. Started SJI-Bought 5 at $23; 5 at $22.6; 5 at $22.2; 5 at $20.87; 5 at $20.5 (1/1/21 Post)
SJI is in the process of being acquired for $36 in cash. South Jersey Industries, Inc. Enters into Agreement to be Acquired State regulatory approval is required but has not yet been received:
"The transaction was unanimously approved by SJI’s Board of Directors, and has been approved by SJI shareholders, the Federal Energy Regulatory Commission, the Federal Communications Commission and has cleared the waiting period under Hart-Scott-Rodino. The transaction remains subject to regulatory approval by the New Jersey Board of Public Utilities."
At least through the 12/16/22 ex dividend date, I am keeping the 120+ shares owned in my Schwab account, including the 100 bought as an arbitrage play. Item # 3. Bought 100 SJI at $33.68 (9/22/22 Post) The average cost per share in that account is $31.59.
I have also eliminated small positions in my ROTH IRA accounts.
Profit Snapshots: +$274.98
Dividend: Quarterly at $.31 per share
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release and 10-Q
As a natural gas utility operating in NJ, SJI's earnings will be concentrated in the 1st and 4th quarters. Earnings for the third quarter will be a loss.
B. Eliminated CAG in Fidelity Account - Sold 18+ at $37.07:
Proceeds: $673.62
CAG Analyst Estimates | MarketWatch
Profit Snapshot: +$52.4
Last Discussed: Item # 6.B. Pared CAG in Vanguard Account - Sold 5 at $36.66 (11/8/22 Post) I discussed the last earnings report in that recent post and have nothing further to add here. SEC Filed Press Release
I have more capital invested in CAG bonds. Item # 2.D. Bought 2 Conagra 4.3% SU Maturing on 5/1/24 at a Total Cost of 98.573 (10/18/22 Post); Bond Detail
C. Eliminated CVX - Sold 1.567 at $180.27 and 3 at $180.18:
Quote: Chevron Corp.
Proceeds: $823
CVX Analyst Estimates | MarketWatch
Berkshire Hathaway has taken a major stake in CVX, last reported at 170M shares. Berkshire Bets Big on Energy With Nearly $60B of Chevron and Occidental Stock | Barron's; SEC FORM 13-F Information Table-Berkshire SEC Filing Made on 11/14/22
Profit Snapshots: +$372.58 (4.157 shares)
1.567 Shares: +$129.5 (11/29/22 sale only)
Last Buy Discussions: Item # 1.B. Bought 1 CVX in Schwab Taxable at $96.5 (10/21/21 Post); Item # 2.I. Added 1 CVX at $98.12-Schwab Taxable (8/12/21 Post); Item # 2.B. Bought 1 CVX at $102.75 (6/19/21 Post)
Dividend: Quarterly at $1.42 per share, last raised from $1.34 effective for the 2022 first quarter payment.
Unlike Shell, CVX did not cut its dividend in 2020 but did keep it steady at $1.29 per share for 5 quarters rather than raising it after 4.
Last Ex Dividend: 11/17/22 (owned all as of)
Last Earnings Report (Q/E 9/30/22): SEC Filed Earnings Press Release
"earnings of $11.2 billion ($5.78 per share - diluted) for third quarter 2022, compared with $6.1 billion ($3.19 per share - diluted) in third quarter 2021. Included in the current quarter were pension settlement costs of $177 million. Foreign currency effects increased earnings by $624 million. Adjusted earnings of $10.8 billion ($5.56 per share - diluted) in third quarter 2022 compares to adjusted earnings of $5.7 billion ($2.96 per share - diluted) in third quarter 2021."
Non-GAAP E.P.S. = $5.56
Consensus at $4.81
Revenues: $66.644B, up $44.71B in the 2021 third quarter
Analyst Reports (available to Schwab customers):
Morningstar (10/31/22): 2 stars with a fair value of $149
S&P (10/31/22): 3 stars with a 12 month PT of $188, increased from $182 after the last earnings report.
Argus (11/11/22): Buy with a $211 PT, raised from $189 in response to the last earnings report; raised 2023 E.P.S. estimate to $20.98 from $17.18 "which assumes a further increase in commodity prices next year and little to no residual impact from the pandemic".
D. Pared BHB in Fidelity Account - Sold 10 at $30:
Quote: Bar Harbor Bankshares (BHB)
Proceeds: $300
BHB "is the parent company of its wholly-owned subsidiary, Bar Harbor Bank & Trust. . . Bar Harbor provides full-service community banking with office locations in all three Northern New England states of Maine, New Hampshire and Vermont."
Bar Harbor Bankshares Analyst Estimates | MarketWatch
Investment Category: Regional Bank Basket Strategy
Profit Snapshot: $79.15 (11/29/22 sale only)
Last Discussed: Item # 3.L. Pared BHB in Fidelity Taxable Account - Sold 5 at $30 (8/16/22 Post) I discussed the second quarter earnings report in that post.
Last Buy Discussions: Item # 2. Restarted BHB in Schwab Taxable Account-Bought 5 at $26.6; 5 at $25.55 (9/17/21 Post); Item # 1.D. Added to BHB-Bought 2 at $22.75; 5 at $21.5 (2/20/21 Post); Item # 2.D. Added to BHB-Bought 5 at $17.5; 5 at $14; 2 at $13.8; 2 at $13.5 (5/2/2020 Post)
Average cost per share this account before pare: $19.4
Average cost per share this account after pare: $17.98 (30 Shares)
 |
| Snapshot Intraday 11/29/22 after pare |
Dividend: Quarterly at $.26 per share, last raised from $.24 effective for the 2022 second quarter payment)
BHB Dividend History | Nasdaq (unadjusted for a 3 for 2 stock splits made in 2017 and 2014, BHB Split History)
Yield at $17.98: 5.78%, raised from 5.36% due to this pare.
Last Ex Dividend: 11/15/22 (owned all as of)
Last Earnings Report (Q/E 9/30/22): SEC Filed Earnings Press Release
"Net income in the third quarter 2022 was $11.4 million, or $0.76 per diluted share, compared to $11.0 million, or $0.73 per diluted share, in the same quarter of 2021. In the third quarter 2022, there was no PPP income compared to $2.7 million in the third quarter 2021."
"Net interest margin was 3.47% compared to 3.02% in the same period of 2021. Acceleration of PPP loan fee amortization due to forgiveness contributed 28 basis points in the third quarter 2021. Interest-bearing cash balances reduced net interest margin by 2 basis points in the third quarter 2022 and 26 basis points the prior year quarter. The yield on loans was 4.04% in the third quarter 2022, and 3.98% in the third quarter of 2021 or 3.62% when excluding interest from PPP loans. Costs of interest-bearing liabilities decreased to 0.48% from 0.50% in the third quarter 2021 primarily due to having a lower percentage of wholesale borrowings to total debt."
Efficiency Ratio: 58%
NPA Ratio = .2%, down from .33%
Charge off ratio: .01%
ROA = 1.2%
ROTE = 17.25%
Other Sell Discussions: Item # 3.E. Pared BHB in Fidelity Account - Sold 2 at $31.5 (12/16/21 Post)(profit snapshot = $18.43); Item # 1.I. Pared BHB-Sold 10 at $28.5 and 5 at $30.5-highest cost lots in Fidelity Taxable Account (3/20/21 Post)(profit snapshot = $95.46): Item # 3.A. Pared BHB-Sold 40 at $24.48-highest cost lots in Fidelity taxable account (12/5/20 Post)(profit snapshot = $38.17); Item # 3.B. Eliminated BHB-Sold 54+ Shares at $26.34 (5/18/19 Post)(profit snapshot = $131.1); Item # 1.A. Sold 100 BHB at $30.69-Used Commission Free Trade (7/15/18 Post)(profit snapshot = $1,718.56) ; Item # 1.A. Sold 50 BHB at $30.02 (5/21/18 Post)(profit snapshot = $666.96); Item #3.A. Sold 100 BHB at $29.55 (4/26/18 Post)(profit snapshot = $682.94) ; Item # 1. A. Sold 30 BHB at $29.42 (3/25/18 Post)(profit snapshot = $41.02); Sold 100 BHB Update For Regional Bank Basket Strategy As Of 5/6/2016 - South Gent | Seeking Alpha (profit snapshot = $936.96)
BHB Realized Gains to Date: +$4,564.25 (currently at #1 in this basket)
E. Eliminated NRIM -Sold 5 at $55.2:
Proceeds: $276
Quote: Northrim BanCorp Inc. (NRIM)
"Northrim BanCorp, Inc. is the parent company of Northrim Bank, an Alaska-based community bank with 17 branches in Anchorage, the Matanuska Valley, Soldotna, Juneau, Fairbanks, Ketchikan, and Sitka, and loan production offices in Kodiak and Nome, serving 90% of Alaska’s population."
Investment Category: Regional Bank Basket Strategy
NRIM Analyst Estimate (just 1)
Last Buy Discussion: Item # 4.J. Restarted NRIM - Bought 5 at $22.42 (8/9/20 Post)
1 Year Chart To 11/29/22: The parabolic rise starting in late October was in response to a much better than expected third quarter earnings report.
Profit Snapshot: +$163.89
Dividend: Quarterly at $.50, last raised from $.41 effective for the 2022 third quarter payment.
Northrim BanCorp, Inc. (NRIM) Dividend History | Seeking Alpha
Last Ex Dividend: 9/7/22 (owned as of)
Last Earnings Report (Q/E 9/30/22):
SEC Filed Earnings Press Release
Comparisons are to the 2021 third quarter.
E.P.S. = $1.76, up from $1.42
NIM = 4.27%, up 80 basis points (excellent)
Efficiency ratio: 63.69%
NPL Ratio = .46%, down from .79%
Coverage Ratio (reserves as a % of NPLs)= 185%
Charge off ratio: net recovery of $353K
ROA = 1.47%
ROE = 18.
Tangible book value per share = $34.27
F. Eliminated REYN in Schwab Taxable Account - Sold 20+ at $32.35:
Quote: Reynolds Consumer Products Inc. (REYN)
Proceeds $661.27
REYN Analyst Estimates | MarketWatch
Profit Snapshot: +$94.96
I discussed the last earnings report in a recent post and have nothing further to add here: Item # 6.E. Pared REYN in Schwab Taxable Account - Sold 2 at $31.28 (11/15/22 Post) I was underwhelmed. SEC Filed Earnings Press Release for the Q/E 9/30/22
Last Discussed: Item # 4.F. Pared REYN in Fidelity Taxable Account - Sold 3+ at $30.91 (11/22/22 Post)
I have not completely abandoned this stock. I still own 31+ shares in my Fidelity account with an average cost per share of $28.76. I will consider adding to that position when a potential purchase will lower my AC per share.
G. Pared FIDU - Sold 1 at $51.77:
Quote: Fidelity MSCI Industrials Index ETF Overview
Sponsor's website: FIDU | ETF Snapshot - Fidelity
Expense Ratio: .08%
Last Discussed: Item # 1.O. Started FIDU - Bought 2 at $48.42; 1 at $47.66; 2 at $47.27(2/6/21 Post)
Profit Snapshot: +$3.34
Average cost per share after pare: $47.02 (5 shares)
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| Snapshot intraday on 11/29/22 after pare |
Dividends: Quarterly at a variable rate
Last 4 Dividends: $.566 per share
Last Ex Dividend: 9/16/22
Yield at $47.02 using $.566 annual dividend rate = 1.2% (one reason for the low exposure)
Holdings with greater than 1% weighting:
H. Sold .447 Share SPYD at $40.93- Remaining fractional share purchased with 2 dividends payments:
Quote: SPDR Portfolio S&P 500 High Dividend ETF Overview
Sponsor's website: SPYD: SPDR® Portfolio S&P 500® High Dividend ETF
Last Discussed: Item # 2.M. Eliminated SPYD in Vanguard Taxable Account - S0ld 7 at $41.73 (11/18/21 Post)(profit snapshot = $96.26)
Last Buy Discussion: Item # 3.I. Started SYPD in Fidelity Taxable-Bought 5 at $29.44, 2 at $28.62, 3 at $27.76, 5 at $27.23 (7/18/20 Post)
Profitably selling shares bought with dividends is a frequent occurrence as part of my risk management strategies and most of those transactions are not discussed here. I quit reinvesting the dividend paid by this ETF in 2020.
Number of Holdings: 80 as of 11/29/22
The index has the highest yielding 80 stocks in the S&P 500. Consequently this ETF will have about a 60%+ weighting in energy, financial, real estate and utility stocks and about 21+% in consumer staples, healthcare (primarily drug stocks), and materials. The information technology sector currently has less than a 5% weighting.
Expense Ratio = .07%
Profit Snapshot: +$4.55
Average cost per share after pare: $28.16 (16 shares)
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| Snapshot Intraday on 11/29/22 after pare |
Dividend: Quarterly at a variable rate.
Last Ex Dividend: 9/16/22
Last 4 Dividends: $1.60 (rounded down)
Yield at $28.16 (using $1.6): 5.68%
Top Holdings as of 11/29/22:
S&P 500 High Div ETF-Morningstar (currently rated 1 star)
The primary stock sectors owned by this fund have historically underperformed the S&P 500 which explains the 1 star rating. However, over the past year through 11/29/22, SPYD had a total return of +1.07% compared to -15.82 for SPY. SPY-Performance-SPDR® S&P 500 ETF Trust | Morningstar
5 year annual average total return through 11/29/22:
SPY = +10.4%
SPYD = +6.82%
While the last 15 years have been a roller coaster ride for stocks, the end result is that the SPY average annual total return was +8.93% over that period. That is below the 11.88% annual average return starting in 1957 through 2021. S&P 500 Average Return
5. Small Ball Buys:
I discuss below adding 5 shares to two problematic stock positions: AQN and NWL. I am working my way up slowly to 100 shares.
A. Bought 5 EMP at $21.75-Vanguard Taxable Account:
Quote: Entergy Mississippi LLC 4.9% First Mortgage Bond
Investment Category: Income Generation with First Mortgage Bonds, Exchange Traded Baby Bonds, a subcategory of Exchange Traded Bonds
Last Discussed: Item # 3.B. Added to EMP in Schwab Taxable Account - (4/14/22 Post)
Security: First Mortgage Lien
Par Value: $25
Credit Ratings: A/A2
Maturity: 10/1/2066 unless called early at issuer's option
Asymmetric interest rate risk in favor of the issuer.
Par Value: $25
Callable now at issuer's option
Interest payments are made quarterly. The bonds trades flat.
Next Ex Interest Date: 12/29/22
Yield at $21.75= 5.63% (.049% coupon x. $25 par value = $1.225 annual payment per share ÷ $21.75 Total cost per share = 5.63%)
Average cost per share this Account: $23.99 (30 Shares)
Yield at AC this Account: 5.1063%
Prior EMP Round-Trip Trades:
Item # 5.A. Pared EMP-Sold 5 at $26.84 (6/27/20 Post);
Item # 4.A. Eliminated EMP-Sold 70 at $24.87 (5/1/19 Post)(profit snapshot = $207.92)-Item # 1.B. Bought 70 EMP at $21.76 (1/2/19 Post);
Items 2.A and B. Sold 50 EMP at $24.97 and 30 at $24.96 (9/21/17 Post)(profit snapshots $167.52)
Maximum Position in all Accounts: 300 shares
I will consider selling my highest cost lots whenever I can profitly do so. The primary interest rate risk mitigation strategy is to average down in 5 share lot buys.
Purchase Restriction: 5 share lots with each subsequent purchase having to be at the lowest price in the account.
B. Added 5 EMP in Fidelity Taxable Account at $21.68:
See Item #5.A. Above.
Average cost per share this account: $23.04 (20 shares)
Yield at AC this account: 5.3168%
C. Added to AQN - Bought 5 at $7.29:
Quote: Algonquin Power & Utilities Corp. (AQN)
AQN Analyst Estimates | MarketWatch
I am averaging down in 5 share lots until I reach 100 shares.
I recently discussed this troubled stock and have nothing further to add here:
Item # 5.E. Added 5 AQN at $7.91; 5 at $7.45 (11/22/22 Post) I discussed the disappointing third quarter report in that post. SEC Filed Press Release
D. Bought 5 STWD at $21.29:
Quote: Starwood Property Trust Inc. (STWD)
Starwood Property Trust, Inc. - Home
2021 Annual Report (risk factor summary starts at page 15 and ends at page 56) I would describe the stock as high risk.
I classify STWD as an extremely complex hybrid equity and mortgage REIT which is unusable since almost all REITs are one or the other.
It is organized into 4 business segments:
Last Buy Discussions: Item # 1.H. Added STWD in Fidelity Taxable Account-Bought 2 STWD at $17.18; 2 at $16.91; 1 at $15.24, 1 at $10.36; 1 at $9.3; 1 at $8.74; 1 at $12.45 ( 4/18/20 Post); Item # 1.C. Added to STWD in Fidelity Taxable Account-Bought 1 at $15.66, 1 at $15.12, 1 at $14.82; 1 at $13.74 (7/25/20 Post); Item # 2.D. Added to STWD in Fidelity Taxable-Bought 1 at $14.29 (12/5/20 Post)
Dividend: Quarterly at $.48 per share
Yield at $21.29: 9.02%
Last Ex Dividend: 9/29/22
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release and 10-Q
GAAP E.P.S. of $.61
Distributable Earnings = $163.3M or $.51 per share
I own STWD in other accounts. The largest position is in my Fidelity account (29+ shares at a $14.26 AC) The current yield for those shares is about 13.46%. I have reduced the AC in that account through profitably selling my highest cost shares. The lowest price paid was $8.5 for a 3/20/20 purchase. Other lots bought at less than $10 in March 2020 were purchased at $8.76 and $9.06.
Sell Discussions: Item # 3.I. Pared STWD -Sold 5.105 at $25.43 (5/14/21 Post) (profit snapshot = $32.18); Item # 1.O. Sold 5 STWD at $25.22 (3/20/21 Post)(profit snapshot = $27.84); Item #1.N. Pared 7 STWD at $23.74 (3/13/21 Post)(profit snapshot = net at $14.56); Items 2.C. Pared STWD in Vanguard taxable-Sold 10 at $20.44 and 2.D. Pared STWD in Fidelity Taxable-Sold 10 at $20.95 (3/6/21 Post); Item # 1.A. Sold 10 STWD at $25.96 (2/16/2020 Post)(profit snapshot = $47.74)
Goal: Any realized gain on the shares + the dividends
E. Bought 5 NWL at $12.5:
Quote: Newell Brands Inc.
NWL Analyst Estimates | MarketWatch
New Average cost per share: $16.22 (45+ shares)
Dividend: Quarterly at $.23 per share
I am reinvesting the dividend as a means to average down randomly.
Yield at AC: 5.67%
Last Ex Dividend: 11/29/22
I discussed this stock in my last post and have nothing further to add here. Item # 4.F. Added to NWL - Bought 5 at $13.05 (11/29/22 Post) I discussed the last earnings report in that post. SEC Filed Press Release
F. Bought 10 CTO at $19.08-Fidelity Account:
Quote: CTO Realty Growth Inc. (CTO)
Management: External
CTO also provides external management services to the publicly traded REIT Alpine Income Property Trust Inc. (PINE) which was created by CTO. As of 9/30/22, CTO owned 16% of PINE's common stock.
CTO also owns subsurface mineral rights and occasionally sells those interests. As of 9/30/22, CTO owned mineral rights associated with 355,000 acres in Florida.
CTO makes commercial loans:
Some revenue is received what is known as a Mitigation Bank. (see 10-Q at pages 22-23.
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
This equity REIT fell 9.11% on 12/1/22 in response to a 3 million share offering priced at $19. Prospectus (proceeds to CTO at $18.145, a hefty underwriters' discount of $.855 per share; greenshoe at 450K shares) Proceeds are expected to partially fund the Atlanta Center acquisition, which is under contract. (see page S-12) The purchase price is $96M. SEC Form 8-K
Last Discussed: Item # 4.K. Added to CTO in Schwab Taxable Account - Bought 2 at $17.77; 3 at $17.54 (10/11/22 Post)
Last Substantive Discussion: Item # 3.E. Bought 5 CTO at $21.54-Schwab Taxable Account (8/30/22 Post)
Dividend: Quarterly at $.38 per share ($1.52 annually)
Yield at $19.08: 7.9665%
Next Ex Dividend: 12/9/22
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release; SEC Filed Investor Presentation; and SEC Filed Supplemental Information
G. Bought 5 TSLX at $18.8; 5 at $18.6:
Quote: Sixth Street Specialty Lending Inc. (TSLX)- A BDC
This is my first purchase of this BDC stock. I will add in 5 or 10 share increments until I hit 100 shares, with each subsequent purchase required to be at the lowest price in the chain.
Management: External
Website: Sixth Street Specialty Lending - TSLX - Home
2021 Annual Report (summary of risk factors starts at page 29 and ends at page 56)
5 Year Financial Data:
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| Page 60 |
10-Q for the Q/E 9/30/22 (summary of investments starts at page 6)
Dividend: Quarterly at $.45 (regular only), increased from $.42 effective for the 2022 4th quarter payment.
Dividends | Sixth Street Specialty Lending Inc.
In 2022, Sixth Street paid $.15 in special dividends.
Yield at $18.7 AC: 9.6257% (regular only)
Next Ex Dividend: 12/14/22
Net Asset Value per share history: For a BDC, I would characterize this history as stable.
Q/E 9/30/22: $16.36
12/31/21: $16.84
12/31/20: $17.16
12/31/19: $16.83
12/31/18: $16.25
12/31/17: $16.09
12/31/16: $15.95
12/31/15: $15.15
12/31/14: $15.53
IPO in March 2021: Prospectus (public offering at $16 per share with estimated proceeds to $15.04, excluding internal expenses connected with the offering of about $.43 per share)
12/31/13: $15.52
12/31/12: $15.19
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release
Net Investment Income: $37.2M
NII per share = $.47
"As of September 30, 2022, the Company’s portfolio based on fair value consisted of 90.4% first-lien debt investments, 1.5% second-lien debt investments, 1.8% structured credit investments, 0.4% mezzanine investments, and 5.9% equity and other investments."
"As of September 30, 2022, 98.9% of debt investments based on fair value in the portfolio bore interest at floating rates, with 100.0% of these subject to reference rate floors."
"As of September 30, 2022 and June 30, 2022, the weighted average total yield of debt and income-producing securities at fair value (which includes interest income and amortization of fees and discounts) was 12.3% and 10.9%, respectively, and the weighted average total yield of debt and income-producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 12.2% and 10.9%."
Interest Rate Sensitivity as of 9/30/22:
As of 9/30/22, almost all loans were classified as performing:
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| Page 54, 10-Q |
6. Cash Flow into My Fidelity Taxable Account - 12/1/22:
I place considerable emphasis on generating a constant stream of cash flow through owning a variety of securities. Included in the proceeding snapshots are the following:
Monthly interest or dividend payments:
Leveraged CEFs: AIO, BWG, ERC, GDO, NCZ
I have fortunately kept my leveraged bond CEF exposure extremely light (BWG, ERC, GDO). Their performance in 2022 has been poor due to owned assets going down in price, which includes securities bought with borrowed money, and the cost of leverage going up.
Other CEF: PPT
BDCs: PFLT, SLRC
CDs: Live Oak (multiple maturities) I am placing an emphasis on buying CDs that pay interest monthly when the coupon is the same for CDs that pay quarterly, semiannually or at maturity.
Quarterly Interest and Dividend Payments:
Exchange Traded First Mortgage Bonds ($25 par value): EAI, ELC
Equity Preferred Stocks: CCNEP
Common Stocks (non-BDCs): CAG, NKSH, TFC
Other: JQC (multi-sector CEF)
Semiannual Payments by Bond Classification:
Tennessee Municipal Bonds: $784.38 (very high credit ratings: Washington County GO at Aa2/AA; Knox County GO at Aa1/AA+; Memphis Water at Aa1/AAA; Sumner County GO at AA+; Maryville GO at Aa2; Johnson City GO at Aa2; Springfield GO at Aa3)
SU Investment Grade Corporate Bonds: $172.5 (of which $68 was paid by utility holding companies Consolidated Edison, Eversource and Wisconsin Electric Power)
First Mortgage $1K par value Corporate Bonds: $158 (operating utility subsidiaries of Entergy) Over the past several months, I have added several FM bonds issued by subsidiaries of other utility holding companies including AEE, CMS, ES, EXC, PEG and XEL while continuing to add FM bonds issued by ETR operating subsidiaries.
Bond Redemption Proceeds: $3,000
Realized Gains from Bond Redemptions: +$64.27
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Common stock dividends are received throughout the month.
Tennessee Municipal bonds pay semiannually on the 1st business day.
Almost all $1K par value corporate bonds pay semiannually. I have purchased a few that pay monthly or quarterly. Most of those are recent purchases through Fidelity's corporate notes offerings.
Interest payments occur throughout the month, but are concentrated on the 1st, 15th and last business day of each month.
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.
