Economy:
The government reported that retail sales decreased 1.1% last month compared to October, but were still up 4.1% Y-O-Y. Retail Sales.pdf
This is purely political. Coronavirus stimulus: Fight over Fed lending powers holds up deal The republicans want to restrain the Fed's ability to respond to financial crises and have conditioned their acceptance of a stimulus package on that demand. Mnuchin has already kneecapped the Federal Reserve's response to the pandemic and financial turbulence related thereto. Fed's Main Street lending program is a dead end for many borrowers; Mnuchin Can Extend Fed Programs, Congress’s Research Agency Says - Bloomberg; Memo re CARES Act Section 4029.pdf This latest republican political gambit is part of that effort to hamstring the Biden Administration's ability to deal with financial crises, just political sabotage, at the cost of a timely passed stimulus package.
The number of Initial claims for unemployment for the W/E 12/12 was reported at 885,000, an increased of 23K from the previous week that was revised up by 9K. The consensus estimate was for 808K. Weekly jobless claims unexpectedly rise, hit highest level since early September
Refinance demand jumps 105% annually, as mortgage rates set record low
Here's more evidence U.S. economy cooled in December- MarketWatch This article refers to Markit's December flash U.S. service index that declined to 55.3 from 58.4 in November. PMI Releases I would not draw any firm conclusions about the future direction from that decline.
Nearly 8 million Americans have fallen into poverty since the summer - The Washington Post (12/16/20), referencing this study.
Philly Fed factory activity stays robust in December - MarketWatch This manufacturing index declined to 26.3 from 32.3 last month. Any number above zero indicates expansion. The index attempts to track manufacturing activity in Delaware, New Jersey and Pennsylvania.
Factory activity in New York loses momentum in December - MarketWatch; Empire State Manufacturing Survey
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Markets and Market Commentary:
S & P 500 P/E Ratios as of 12/18/20:
GAAP TTM = 42.08
Non-GAAP Estimated forward 12 months: 26.25
Sourced: P/E & Yields
Shiller PE Ratio 33.77
Shiller PE Ratio - 150 Year Chart | Longtermtrends
Market Cap to GDP Ratio - The Buffett Indicator - Updated Historical Chart | Longtermtrends
The Q Ratio and Market Valuation: November Update - dshort - Advisor Perspectives
Robert Shiller calls stocks ‘highly priced,’ but wouldn't cash out
Intel falls on report Microsoft will design own chips for PCs, servers That would be a major negative for Intel when and if it happens.
Jamie Dimon says he wouldn't touch Treasurys with a 10-foot pole at these rates
Approximately $18 trillion of bonds now trade at negative nominal yields. That does not include the trillions more that have positive nominal yields and current negative real yields
Fed allows banks to resume share buybacks, JPMorgan stock jumps In response to the Fed's action, JPM announced after the close that its Board has authorized the purchase of up to $30B in stock, starting in the 2021 first quarter. SEC Filed Press Release JPM rose over 6% in after hours trading yesterday. JPM Other big bank stocks benefiting in after hours trading include BAC; BK; C; GS and TFC, Larger regional banks were up but in smaller percentage amounts including CFG; HBAN; and KEY. I own all of those stocks except for C and GS. I suspect that the stock market's surge in late trading may be linked to some investors being aware of this development before public disclosure.
Apple Fitness Plus review: A strong Peloton competitor for less money I just do not understand Peloton's stock price.
FireEye Says ‘”Intrusion Campaign’ Used Tainted SolarWinds Software | Barron's
How Vaccines Are Tanking the Dollar, and What It Means for Stocks | Barron's Notes that DXY is down about 12.5% since 3/20/20. The argument is that the vaccine will help Europe's economy more than the U.S. I am a long term USD bear for reasons that have nothing to do with the pandemic. (Barron's is a subscription publication. I pay monthly)
Trade Weighted U.S. Dollar Index: Advanced Foreign Economies, Goods and Services-St. Louis Fed
USD Price Outlook: US Dollar Free Fall Reignited by Dovish Fed (12/17/20)
U.S. Dollar Index Technical Chart - Barchart.com
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Trump:
Nine Election Fraud Claims, None Credible - FactCheck.org
With the electors casting their votes last Monday, Joe Biden is the President-Elect, and no court has the power to overturn that result.
It certainly looks like Don the Authoritarian and his cult will not accept the result that is now mandated by the U.S. Constitution, but that is not surprising.
Donald views the election certifications as "severely punishable" criminal acts:
If Donald lost the election, it was not due to his actions and words, but to Fox "news" who, while embarrassing servile to Donald, did not lick his boots and kiss his ass long enough.
How can that be?
As I understand the issue, it all started with the ghost of Hugo Chavez deleting votes for Trump and changing Trump votes to Biden. The Chinese communists are apparently involved as well in some manner.
Proof of such a nefarious scheme, admissible in a court, is not required before Trumpsters accept a fact free conspiracy theory as true. Their preference is just to make stuff up and then repeat it over and over in an echo chamber. Repeating a lie several times makes it true in TrumpWorld, with veracity further established by writing the lie in large cap letters, retweeting it and claiming that everybody knows it is true.
Once a Trumpster forms an opinion, no amount of reliable evidence contradicting the underlying basis of their opinion will ever convince them to even reconsider.
The most recent poll found that 77% of republicans believe that Biden won through fraud. National (US) Poll - December 10, 2020 - 60% View Joe Biden's 2020 Victory as Legitimate | Quinnipiac University Connecticut
That poll result is consistent with the 81% of republicans who view Donald as honest and almost the same percentage who view that malevolent creature as a role model for their children.
Dunning-Kruger Effect | Psychology Today; An Overview of the Dunning-Kruger Effect ("Essentially, low ability people do not possess the skills needed to recognize their own incompetence.")
Where is the verified list of dead people who cast votes after their passing? So far, I have seen some evidence of two people casting votes for the recently departed but those votes were probably for Trump. Thin Allegations of 'Dead People' Voting - FactCheck.org; US Election 2020: The 'dead voters' in Michigan who are still alive - BBC News; The dead voter conspiracy theory peddled by Trump voters, debunked; Votes cast in the names of deceased people - Ballotpedia (since, 1997, the Heritage Foundation has found 19 cases where someone voted or attempted to vote in the name of a decease person. It is a felony.)
The 100% pure Trumpster Senator Ron Johnson (R) held a bogus hearing about the election, where he invited Trump lawyers to testify about their fraud claims. Opinion | We’ve finally identified the source of fraud in the 2020 election. It’s Ron Johnson. - The Washington Post The lawyer who contested the Nevada election result, Jesse Binnall, "gesticulated madly" during the hearing and claimed that 1,500 dead people voted. When he presented this so called claim to a court, it was rejected as being unsupported by evidence. Claims of Nevada voter fraud rejected by state’s top court | Fact Check
Trump's lawyer in Wisconsin testified during Johnson's kangaroo hearing, claiming that over 200K voters cast "illegal" ballots, a claim rejected by both the state and federal courts. What the republicans conveniently overlook is that most of the mail-in ballots that Trump wanted to toss were cast in accordance with the Wisconsin Election Commission's long standing past practices, which were in existence when Trump won the state in 2016. It was only after the mail-in ballots were cast, and Trump lost, that these bad faith claims are made. To emphasize a point, the voters simply followed the rules laid down by the election commission.
Trumpsters have attempted to manufacture claims of fraudulent votes but real evidence is lacking. And, when challenged, the claims quickly start to fall apart. Apparently, truth in TrumpWorld is established by Trump, Sean Hannity and other reality creating propagandists repeating the claims over and over again. Trump routinely republishes tweets from those propagandists in his twitter feed.
Fox "news", particularly the evening propaganda messaging, bears a great deal of responsibility for creating the false narratives that result in those opinions which are impossible to reconcile with reality.
Yochai Benkler, a Harvard law school professor, recently noted the right wing is in a "feedback loop where the media give the audience weapons and tools with which to deny reality. And the audience disciplines the media by threatening to go somewhere even wackier if they don’t toe the line.” Inside the Right-Wing Media Bubble, Where the Myth of a Trump Win Lives On - The New York Times Benkler is a co-author of Network Propaganda: Manipulation, Disinformation, and Radicalization in American Politics: Amazon.com
Trump is encouraging his millions of followers to abandon Fox and to start watching the even faker "news" networks:
 |
| 12/16/20 |
The purpose of this right wing propaganda is to manipulate for power and money, not for the ones manipulated, but for those people performing the manipulation. Donald will continue to fight the election results since he is milking the suckers for boatloads of money that he can spend on just about anything.
‘An Indelible Stain’: How the G.O.P. Tried to Topple a Pillar of Democracy - The New York Times; republished at MSN: ‘An Indelible Stain’: How the G.O.P. Tried to Topple a Pillar of Democracy
Trump and his GOP allies vow to ‘fight on’ after Supreme Court rejects legal challenge to overturn election results - The Washington Post Demagogue Don attacks his allies who refused to disobey their state laws:
This is just a sample of the Mad King's tweets published on 12/15, limited to just a few of the false claims about voting machines:
What an asshole.
Trump schemes next political moves after effort to overthrow democracy dead ends at Supreme Court
Trump loses Wisconsin federal court election lawsuit (12/12/20)(the judge was appointed by Trump); Federal Judge in Wisconsin Deals Trump Another Court Defeat - The New York Times "This court has allowed the plaintiff the chance to make his case,” Judge Ludwig wrote, “and he has lost on the merits." This was another Trump effort to set aside the popular vote and have a judge anoint him as the winner.
Excerpt from Judge Ludwig's Decision.pdf
Christopher Krebs sues Trump campaign, Joseph diGenova for defamation; Trump campaign lawyer diGenova says ex-cyber chief should be 'shot' Krebs IMO deserves a large punitive damage award.
The Texas AG, Ken Paxton, the one who filed the anti-democracy petition with the Supreme Court, may be angling for a Trump pardon. Subpoenas served in Ken Paxton case
Breaking: Trump Throws Impotent Fit Over “Rigged” Election for 38th Day Straight | Vanity Fair (12/15/20)
Trump shares tweet saying Ga. Gov. Brian Kemp will 'be going to jail' - Business Insider
Kevin McCarthy (R) still doesn’t call Joe Biden president elect | The Sacramento Bee (12/15/20). Even after the electoral college vote, McCarthy, the republican House minority leader, still refuses to acknowledge Biden as President-Elect. McCarthy supported the Supreme Court petition filed by Texas that requested the cancellation of the popular vote in 4 states and to allow the republican legislatures to appoint electors. McCarthy just wanted to protect democracy by canceling a few million votes. and then permitting republican legislatures to reelect Donald for another 4 years.
In the U.S. now, there is a pro-democracy party and an anti-democracy one which has strong and growing authoritarian tendencies and impulses and routinely peddles fact free conspiracy theories that undermine democratic processes and institutions necessary for a democracy to function properly.
Opinion | How do we hold the traitors to democracy accountable? - The Washington Post
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Covid 19 Updates:
The virus remains firmly "under control" in TrumpWorld. I know that is the case from reading Donald's tweets where he does not mention the pandemic, so it either does not exit or he is too deep into narcissistic injury and rage to notice:
 |
| As of 12/18/20 |
Covid-19 Live Updates: Up to 300,000 Cases Are Traced to Boston Biotech Conference - The New York Times (12/12/20 article); Phylogenetic analysis of SARS-CoV-2 in Boston highlights the impact of superspreading events | Science I discussed this super spreader event several months ago. It was one of the early indications that infections spread easily and fast, when no precautions were taken, and that the primary source of the U.S. pandemic came from European travelers. The meeting occurred in late February 2020. How Biogen Became a Coronavirus ‘Superspreader’ - The New York Times (4/12/20 article)
'This Is a Phony Pandemic': GOP Congressman-Elect Bob Good Praises Maskless Trump Supporters at Rally Mr. Good, a pure Trumpster, beat Dr. Bryant Cameron Webb, MD, JD in the 2020 election for Virginia's 5th Congressional District. Dr. Webb graduated with a M.D. from Wake University and a J.D. at Loyola School of Law in Chicago after receiving a B.A. decree from the University of Virginia. Republicans know how to find like minded people.
Covid: U.S. death toll tops 300,000 as vaccine rollout begins (12/14/20)
Dodge City Kansas mayor Joyce Warshaw resigns after receiving threats over mask mandate - The Washington Post; republished at MSN: Kansas mayor resigns over violent threats for backing mask mandate: ‘I do not feel safe anymore’ The Trumpsters threatened her with messages like Burn in hell, Get murdered, We’re coming for you.”
Marjorie Taylor Greene Says Pelosi Mask Mandate Violates Her Rights: 'My Body My Choice' Ms. Green (R-GA), a QAnon True Believer and recently elected to Congress, is simply expressing her constitutional right to infect and kill others because it is her body and her choice to wear a mask. What is irrelevant, of course, is the health of other people, but that is just how they think.
‘Like a Hand Grasping’: Trump Appointees Describe the Crushing of the C.D.C. - The New York Times Kyle McGowan, a former chief of staff at the Centers for Disease Control and Prevention, and his deputy, Amanda Campbell, have gone public on Trump's effort to dismiss science, "the White House’s slow suffocation of the agency’s voice, the meddling in its messages and the siphoning of its budget."
Trump is better understood IMO when you just admit that he is a malignant narcissist and sociopath.
++
1. Eliminated CVA in 2 Taxable Accounts:
A. Eliminated CVA in Schwab Account-Sold 70+ at $12.76:
Quote: Covanta Holding Corp. (CVA)
"Annually, Covanta’s modern Waste-to-Energy ("WtE") facilities safely convert approximately 21 million tons of waste from municipalities and businesses into clean, renewable electricity to power one million homes and recycle 500,000 tons of metal. Through a vast network of treatment and recycling facilities, Covanta also provides comprehensive industrial material management services to companies seeking solutions to some of today’s most complex environmental challenges."
CVA sells the energy generated by using garbage as a fuel and will receive a tip fee for taking the garbage. A tip fee is a charge based on the quantity of garbage received at CVA's waste-to-energy facilities.
Total Ash Processing - Covanta
Home | Covanta Environmental Solutions
Profit Snapshots: +$67.02
Note that it took several average down buys to dig myself out of a hole.
Dividend: Quarterly at $.08 per share, cut from $.25 effective for the 2020 second quarter payment. This slash was largely related to the negative impacts from the pandemic. Covanta Investors-Dividends
While the cut was understandable under the circumstances, the slash took away a major reason for owning the stock.
Another negative is the company is over-leveraged IMO.
CVA's senior unsecured debt is currently rated at B1/B, which is another explanation for the dividend slash. CVA 6% SU Maturing on 1/1/2027-FINRA Page Arguably, the prudent course would be to eliminate the dividend and to use the extra cash to pay down debt.
Next Ex-Dividend: 12/30/20
Most Recent Bond Offering: Prospectus for $400M in SU Bonds maturing in 2030 (proceeds to be used to pay off 5.875% SU note maturing in 2024)
Last Earnings Report (9/30/20): SEC Filed Press Release
B. Eliminated CVA in Vanguard Taxable Account-Sold 44+ at $13.19:
2. Sold 1 of 3 Ventas 3.125% SU Bond Maturing on 6/15/23 at 105.350:
Profit Snapshot: +$57.96
My 1 bond was the only trade that day.
The other 2 bonds, which are still owned, were bought at a total cost of 99.324. Item # 1.C. (3/10/2017 Post) The semi-annual interest payment for those 2 bonds is included in the snapshots in Item # 5 below.
3. Small Ball:
A. Started BMY- Bought 5 at $63; 1 at $61.55; 1 at $61.24; 3 at $61; 2 at $60.4:
Quote: Bristol Myers Squibb Co.
BMY Analyst Estimates | MarketWatch
I briefly mentioned purchasing BMY in a 11/23/20 comment.
Bristol Myers has been busy on the acquisition front.
Bristol-Myers Squibb Completes Acquisition of Celgene, Creating a Leading Biopharma Company (November 2019);
Bristol Myers Squibb Completes Acquisition of MyoKardia, Strengthening Company’s Leading Cardiovascular Franchise (all cash transaction of $13.1B)
The Celgene acquisition brought to BMY the drug Revlimid used to treat cancers of the blood and lymph nodes. Revlimid had $10.8B in 2019 sales. The patents start to expire in 2022 and will be subject to full blown generic competition in 2026. BMY recently reached a settlement with a generic company. Bristol Myers Squibb - Bristol Myers Squibb Announces Settlement of U.S. Patent Litigation for REVLIMID® (lenalidomide) with Cipla
Pharmaceutical R&D Pipeline - Bristol Myers Squibb
Last Bond Offering (November 2020): Prospectus
The financing cost for acquisitions using cash is very low on an after tax basis.
Average Cost Per Share: $61.8 ( shares this account)
Dividend: Quarterly at $.49 per share ($1.96 annually)
Bristol Myers Squibb Announces Dividend Increase This was an 8.5% increase over the prior rate and will be effective for the 2021 first quarter payment.
Yield at AC: 3.17%
Last Ex Dividend: 10/1/2020 (at $.45 per share)
Next Ex Dividend: 12/31/20 (at $.49 per share, payable on 2/1/2021)
5 year Chart:
Last Earnings Report (9/30/20):SEC Filed Press Release
GAAP E.P.S. = $.82
Non-GAAP E.P.S. = $1.63
Adjustments Made to GAAP:
The primary adjustment is a non-cash expense for amortization of intangibles related to BMY's acquisition of Celgene. Amortization of Intangibles Definition
Main Product Revenues:
BMY and PFE co-developed Eliquis, an anticoagulant drug, and share profits on a 40/60 basis. A federal district court recently upheld this drug's composition of matter patent, expiring in 2026, and its formulation patent expiring in 2031. The Bristol-Myers Squibb-Pfizer Alliance is pleased with the U.S. District Court decision to uphold both the composition of matter (COM) patent (US 6,967,208) and formulation patent (US 9,326,945) covering Eliquis®.
Recent New Drug Approvals and New Indication Approvals for Existing Compounds:
Bristol Myers Squibb Announces Commercial Launch and Availability of ZEPOSIA® (ozanimod), a New Oral Treatment for Relapsing Forms of Multiple Sclerosis (6/1/20); U.S. Food and Drug Administration Approves Bristol Myers Squibb’s ZEPOSIA® (ozanimod), a New Oral Treatment for Relapsing Forms of Multiple Sclerosis (3/26/20)
The new approved indications for Opdivo may increase revenues starting next year that have suffered recently from competition.
Broker Reports: I am referring to reports available to me when I purchased this stock:
S & P (11/14/20): 4 stars with a 12 month PT of $75
Morningstar (11/4/20): 3 stars with a FV of $68
Argus (9/9/20): Buy with a $83 PT
On 11/30/20, Citigroup raised its PT to $77 from $73. I do not have access to that report.
As far as I can tell, my only prior purchase was made in 2010. Item # 6 Bought 50 BMY at $22.95 (6/4/2010 Post) Our Head Trader here at HQ, believed to be Left Brain at that time, sold that lot at $26.15 shortly thereafter. Item # 5 Sold BMY at $26.15 (8/9/2010 Post):
 |
| 2010 BMY 50 Shares +$140.1 |
Dividend Yield: 3.18%
D. Added to Kellogg (K)-Bought 4 at $62.7; 2 at $62.44; 2 at $61.3 :
Quote: Kellogg Co. (K)
I discussed these adds in a 11/24/20 comment.
On 12/17/20, Morgan Stanley maintained its equal weight rating but lowered its price target to $64 from $71. I do not have access to that report.
The current group think among analysts is that packaged food companies are experiencing a non-sustainable increase in revenues due to the pandemic.
Once that dissipates, the herd opinion is that earnings will be flat or decline Y-O-Y. The Stock Jocks will not like that result and will sell the shares in anticipation, as now, or sell when those expectations occur.
This herd behavior which attempts to anticipate what others may do results in discounting the recent better than expected earnings and even treating them negatively which is the case with Kellogg's share price that is below the February 2020 level.
Those considerations impacting the current price have nothing to do with the fair value of the company as a going concern.
Stock Information as of 12/18/20:
Kellogg Company | Our Brand Portfolio
Last Discussed: Item # 1.D. Restarted Kellogg-Bought 1 at $64.52; 1 at $63.9; 1 at $63, 1 at $62.32; 1 at $61.9, 1 at $61.34 (10/10/20 Post)
Last Sell Discussions: Item # 1.B. Sold 30 K at $66.3 (3/21/20 Post); Item # 2. Pared Kellogg- Sold 10 at $69.3 (1/8/2020 Post); Item # 2.C. Sold 10 K at $66.3 (12/28/19 Post); Item # 3.B. Sold 10 K at $63.95 (8/10/2019 Post) I realized a $525.98 gain from those sells. The lots were bought at $55.44 and $54.68: Item # 1 Bought 50 Kellogg at $55.44 and 10 at $54.68-Used Commission Free Trades (7/20/19 Post)
Average Cost per share this account: $62.49 (15 shares)
Dividend: Quarterly at $.57 per share ($2.28 annually)
The dividend was last raised from $.56 effective for the 2019 third quarter. Historically, dividend raises have occurred in the third quarter, but that was not the case in 2020.
Yield at AC = 3.65%
Last Ex Dividend: 11/30/20
5 Year Chart:
Last Earnings Report (Q/E 9/26/20): SEC Filed Press Release
"On an organic basis, which excludes the impact of the divestiture and currency, net sales increased by 7%, as at-home demand remained elevated during the COVID-19 pandemic, more than offsetting a related decline in away-from-home food sales."
"As the COVID-19 pandemic continued throughout the third quarter, demand for packaged foods for at-home consumption remained elevated, albeit moderating from the previous quarter". IMO, the Stock Jocks viewed the reference to moderating demand as the most important disclosure in this report.
The divestiture refers to the sell of Keebler cookies and other products on 7/28/19. Those products were sold for approximately $1.3B in cash.
Full Year Guidance:
10-Q for the Q/E 9/26/2020 ("In frozen veggie foods, our MorningStar Farms brand grew consumption nearly 18% in the quarter, with growth being limited by capacity limitations." at page 38)
Veggie Cuisine | MorningStar Farms®
Purchase Restriction: Each subsequent purchase, other than through dividend reinvestment, must reduce my average cost per share.
Maximum Position: 100 shares in all accounts.
E. Started KHC-Bought 5 at $32.3:
Quote: Kraft Heinz Co.
I briefly mentioned this purchase in a 11/23/20 comment.
Stock Information as of 12/18/20:
The Kraft Heinz Company Brands
The 2015 merger of Kraft and Heinz proved to be a disaster as reflected in the price chart below:
H.J. Heinz had been taken private in 2013, with Heinz shareholders receiving $72.5 per share or about $23B in cash + assumption of debt. The acquirers were Berkshire Hathaway and a company called 3G Capital.
Heinz then merged with Kraft whose shareholders received a special cash dividend of $16.5 per share plus shares in the combined company. The Kraft Heinz Company Announces Successful Completion of the Merger between Kraft Foods Group and H.J. Heinz Holding Corporation; KRAFT FOODS GROUP DECLARES REGULAR QUARTERLY DIVIDEND OF $0.55 PER SHARE AND CONDITIONAL SPECIAL CASH DIVIDEND OF $16.50 PER SHARE
What went terribly wrong is beyond the scope of my discussion here. I would just attribute the problems to the acquisitions being overpriced, too much debt, a focus on cost cutting that hurt the brands, and a necessary dividend slash given those issues. Arguably the dividend needed to be cut even more.
Dividend: Quarterly at $.40 per share, reduced from $.625 effective for the 2019 first quarter payment. Dividend History | The Kraft Heinz Company
The Kraft Heinz Company Declares Regular Quarterly Dividend of $0.40 Per Share
Until debt is paid down significantly from current levels, it would be prudent IMO to cut the quarterly dividend to a nominal amount. The company has for now committed to paying out a high dividend. Last February, S & P cuts KHC's senior unsecured debt rating to BB+, a junk category, citing the commitment to the current dividend.
Maybe the pandemic fueled demand and the pending sell of several KHC cheese businesses, expected to close in the 2021 first half, will take that pressure off and allow KHC's credit rating to return to BBB-. Lactalis Group Announces Agreement to Acquire Kraft Heinz’s Natural Cheese Division(9/15/20) The brands that Lactalis will acquire include Cracker Barrel, Knudsen, and Breakstone's. The purchase price was not disclosed, but Argus estimates that the brands being sold had about $1.8B in revenues for the year ending on 6/30/20.
Yield at $32.5 = 4.92%
Last Ex Dividend: 11/25/20
It is possible that the company has started to turn the corner. A plan was announced on 9/15/20. The Kraft Heinz Company Unveils Its Strategic Transformation Plan, Updates 2020 Outlook, and Provides Long-term Financial Algorithm
Since recent results have been positively impacted by increased demand for packaged foods due to the pandemic, it remains unclear whether that is the case.
5 Year Chart:
Last Earnings Report (Q/E 9/26/20): SEC Filed Press Release
Organic net sales up 6.3% (consensus at 5.1% Argus report)
GAAP E.P.S. $.49Non-GAAP E.P.S. $.70
Free Cash Flow first 9 months: $2.9B, up 107.8% compared to comparable period in 2019
Cash: $2.72B
Long Term Debt: $27.882 billion
I have own KHC SU bonds but do not currently have a position. The yields are unattractive compared to the common stock. (E.G. see the yield-to-maturity for the 3.95% SU maturing on 7/15/2025, Bond Detail)
Reconciliation of GAAP to Non-GAAP E.P.S.
Almost the entire add back to GAAP E.P.S. involves non-cash impairment charges (goodwill and intangible assets)
In the past, I owned both Heinz and Kraft but have never owned Kraft Heinz stock. Some prior trade snapshots which go back to 2009-2011:
Broker Reports (available to Schwab customers)
F. Pared SCM (Fidelity Account)-Sold 20 at $11.08:
Quote: Stellus Capital Investment Corp. (SCM)-a BDC
Stock Information as of 12/18/20:
The pare reduced my average cost per share in that account to $8.15 from $8.62.
Profit: $9.11
Dividend: Quarterly at $.25
Yield at AC of $8.15: 12.27%
Last Ex Dividend: 12/14/20
Last Substantive Buy Discussion: Item # 1.E. Bought 5 SCM at $7.41 in Fidelity Account (8/15/20 Post) I discussed the second quarter earnings report in that post.
Last Earnings Report (Q/E 9/30/20): Stellus Capital Investment Corporation Reports Results for its Third Fiscal Quarter Ended September 30, 2020
NII Per Share: $.27 per share
Net Asset Value Per Share: $13.17
Discount at AC of $8.15 = 38.12%
10-Q for the Q/E 9/30/20 (list of investments starts at page 6)
Asset Quality per SCM:
 |
| Page 65 10-Q |
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| Page 65 10-Q |
G. Pared SCM Vanguard Account-Sold 20 at $11.17:
History this Account Before Pare:
I sold the 5 lot purchases made on 3/11 at $10.83 and on 3/13/20 at $10.5, using the specific identification cost method.
Average Cost this Account before pare: $8.95
Average Cost after pare: $8.52 (40 Shares)
Yield at $8.52 = 11.74% (regular dividend only)
Sell Discussions: Item # 1.I. Sold 20 SCM at $7.61 (8/22/20 Post)(profit snapshot = $10.84; contains snapshots of prior round-trips); Item # 3 Eliminated SCM - Sold 50 at $13.72 (9/21/19 Post)(profit snapshot = $3.75); Item # 1.B. Sold 32+ SCM at $14.22-Used Commission Free Trade (2/2/19 Post)(profit snapshot = $78.09); Item # 1.A. Sold Highest Cost Lot-50 Shares at $12.63 (5/3/18 Post)(profit snapshot = $34.24); Item 2.B. Sold 100 SCM at $14.23 (2/27/17 Post)(profit snapshot=$285.96); Item # 2 Sold 100 SCM at $13.02 (1/12/17 Post)(profit snapshot= $141.96)
SCM Realized Gains to Date: $569.06 (prior profits = $554.83)
Goal: Total return in excess of the dividend payments.
I also own 10 SCM shares bought in my Schwab taxable account at $8.53 and in two Roth IRA accounts.
H. Pared FFIC (Fidelity Taxable)-Sold 10 at $14.05; 5 at $16-Highest Cost Lots this account:
Quote: Flushing Financial Corp. (FFIC)
These pares reduced my average cost per share from $11.16 to $10.29.
Profit Snapshot:+$39.96
Last Discussed: Item # 1.F. Restarted FFIC-Bought 10 at $12.25; 2 at $10.7; 5 at $10.6; 3 at $10.3; 10 at $10.2 (10/3/2020) I discussed the second quarter earnings report in that post.
Investment Category: Regional Bank Basket Strategy
New AC this account = $10.29 (15+ shares)
Tangible Book Value per share as of 9/30 = $20.22
Discount to Tangible Book at $10.29 = -49.11%
Dividend: Quarterly at $.21 per share, last raised from $.20 effective for the the 2019 first quarter
Yield at $10.29 AC = 8.16%
Last Ex Dividend Date: 12/8/20
Last Earnings Report (Q/E 9/30/20): SEC Filed Press Release
I. Pared PNNT-Sold 10 at $4.05:
Quote: PennantPark Investment Corp. (PNNT) -Viewed as a deservedly hated BDC
Stock Information as of 12/18/20:
Investment Category: Lottery Ticket Basket
Profit Snapshot: $7.81
Item # 1.O. Restarted PNNT-Bought 10 at $3.27 (9/26/20 Post)
New Average Cost: $2.99 (10 shares)
Item # 1.K. Added 5 PNNT at $3.06; 5 at $2.92(11/13/20 Post)
Dividend: Quarterly at $.12 per share, reduced from $.18 effective for the 2020 second quarter payment.
Yield at $2.99: 16.05%
Last Ex Dividend: 12/16/20
Last Earnings Report (Q/E 9/30/20): SEC Filed Press Release
GAAP Net Asset Value Per Share: $7.84
Discount to Net Asset Value at $2.99 = 62.5%
GAAP NII Per Share = $.11
NON-GAAP NII per share: $.14
Yield on Credit Investments as of 9/30: 8.9%
"Subsequent to September 30, 2020, our portfolio company, Cano Health, LLC (ITC Rumba, LLC), entered into a business combination agreement with Jaws Acquisition Corp (“JWS”), a special purpose acquisition vehicle, and other parties, subject to certain closing conditions, with an expected closing late first quarter or early second quarter 2021. Based on the closing stock price of JWS on November 13, 2020, our $18.8 million common stock fair valuation as of September 30, 2020 would increase to an estimated $72.3 million, which includes a combination of cash and stock, assuming the transaction closes based on the agreed terms. This would represent a net asset value increase of $0.80 per share, as of November 13, 2020. Our shares are owned by a limited partnership controlled by the financial sponsor and are subject to customary lock up restrictions. As a result, the fair value on December 31, 2020, may likely include an illiquidity discount not in the public trading values indicated above. There can be no assurance that the implied value of our equity interest will be representative of the value ultimately realized on our equity investment."
5 Year Annual Average Total Return Through 12/18: +5.85%
Sourced: DRIP Returns Calculator | Dividend Channel
Total return includes reinvestment of dividends.
While the 5 year total return number is positive, the annual average is well below the annual dividend numbers. This indicates that a trading strategy needs to be used when the objective is a total return in excess of the dividend yield. The annual average total return without dividend reinvestment is lower at 5.2%, which also points to significant share price depreciation over this period.
So far, I have a total return in excess of the dividend payments through trading.
J. Pared TFC-Sold 2 at $48.4 (highest cost lot):
Quote: Truist Financial Corp. (TFC)
This bank holding was formerly known as BB & T.
"Headquartered in Charlotte, North Carolina, Truist is the sixth-largest commercial bank in the U.S. with total assets of $499 billion as of September 30, 2020."
This pare reduced my average cost per share to $27.69 from $28.59.
Profit Snapshot: +$35.06
Adjusted E.P.S. Calculation:
K. Added 20 PPT at $4.54:
Quote: Putnam Premier Income Trust Overview
Sponsor's Website: Putnam Premier Income Trust
Last SEC Filed Shareholder Report for the period ending 7/31/20
Last Buy Discussion: Item # 1.C. Added to PPT-Bought 10 at $4.59; 20 at $4.53; 10 at $4.43; 10 at $4.4 (9/26/20 Post)
Average Cost Per Share this Account: $4.78 (525+ shares)
Dividend: Monthly at $.026 per share ($.312 annually), reduced from $.035 per share effective for the December dividend. The dividend is still supported by ROC.
Yield at AC: 6.53% (at new reduced penny rate)
Last Ex Dividend Date: 11/23/20
Next Ex Dividend Date: 12/22/20
Data Date of 11/23/20 Trade:
Closing Net Asset Value Per Share: $4.91
Closing Market Price: $4.54
Discount: -7.54%
Sourced: PPT- CEF Connect
L. Bought 50 RRD at $1.37:
Quote: R.R. Donnelley & Sons Co.
Stock Information as of 12/19/20:
I discussed the reasons for a recent price surge in this comment.
"Investment" Category: Lottery Ticket Basket
RRD Analyst Estimates | MarketWatch
RRD Key Developments | Reuters
Website: RRD | Multichannel Marketing Communications
Recent News: RRD has been selling some businesses to raise capital that will be used to pay down debt.
RRD Completes Sale of International Mail and Parcel Logistics Business (11/3/2020)
RRD Closes Sale of its DLS Worldwide Logistics Business (11/2/20)-RRD Enters into Definitive Agreement to Sell its DLS Worldwide Logistics Business to TFI International for $225 Million Cash
Based on a recent Bloomberg article, RRD was shopping its Asia-Pacific printing and packaging operations and was asking $800M. RRD responded in this press release, claiming it was not "currently" in discussions: RRD Responds to Recent Rumors Regarding Its Asia Pacific Business It would be a positive for RRD to sell those operations for $800M or thereabouts and to use the proceeds to pay down debt.
5 Year Chart: Ugly even for a Lotto
5 Year Financial History: Not Pretty
Sourced: 2019 Annual Report at page 20
Last "Earnings" Report (Q/E 9/30/20): RRD Reports Third Quarter 2020 Results
Cash = $414.5M as of 9/30/20:
Long Term Debt: $1.8769B as of 9/30/20
Expects debt to be reduced by $350M to $400M in the current quarter.
GAAP E.P.S. = ($.13) "included third quarter charges of $0.52 per share for restructuring and other"
Non-GAAP E.P.S. from continuing operations: $.32
RRD Bonds: I discuss buying a $25 RRD senior unsecured bond in the Trust Certificate form of ownership in Item # 2.A. below.
I have bought and sold RRD $1K par value bonds but no longer have any and would be unwilling to buy 1 at their current prices given the risk/reward balance.
M. Started BKH-Bought 1 at $60; 1 at $59; 1 at $58; 2 at $57.5 :
Quote: Black Hills Corp. (BKH)
"Based in Rapid City, South Dakota, the company serves 1.28 million natural gas and electric utility customers in eight states: Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming".
Stock Information as of 12/18/20:
Business Segment Description-2019 Annual Report at page 9: 2019 Annual Report
Average Cost Per Share: $58.4 (5 shares)
Dividend: $.565 per share ($2.26 annually)
Black Hills Corp. Announces 5.6 Percent Dividend Increase (10/27/20)
Yield at AC: 3.87%
Last Ex Dividend: 11/16/20 (before purchases)
Last Bond Offering: Black Hills Corp. Announces Pricing of $400 Million Debt Offering (6/12/20)(2.50% senior unsecured notes due June 15, 2030); Prospectus
5 Year Chart:
Last Earnings Report (Q/E 9/30/20): SEC Filed Press Release
Forward Guidance 2020 and 2021: 2021 Non-GAAP at between $3.75 to $3.95
Other Recent News:
Black Hills Corp. Completes 52.5-Megawatt Corriedale Wind Energy Project and Begins Commercial Operations (12/1/2020) The prairie states have optimal locations for wind generation.
Black Hills Corp. Announces Clean Energy Goals (11/5/2020)
This is my first purchase of the common stock. I currently own 1 SU bond issued by Black Hills Item # 3.B. Bought 1 Black Hills 3.95% SU Bond Maturing on 1/15/26 at a Total Cost of 99.349 (6/7/18 Post); FINRA Bond Detail (currently rated at Baa2/BBB+ with S & P 1 notch higher than Moody's) I have owned others in the past which have been redeemed by the issuer.
Quote: Avangrid Inc.
4. Exchange Traded Bonds:
A. Bought 10 PYS at $18:
Quote: Merrill Lynch Depositor Inc. PPLUS Cl A 6.3% TRUCs Series RRD-1 for R.R. Donnelley & Sons Co
Investment Category: Trust Certificate, a subcategory of Exchange Traded Bonds
Security: Trust Certificate Prospectus
Legal Form of Ownership: The Trust Certificate ("TC") represents an undivided beneficial interest in a R.R. Donnelley (RRD) senior unsecured bond maturing on 4/15/2029. Prospectus for RRD Bond (optional redemption subject to make whole provision, at page S-3) The TC matures at the same time as the underlying bond.
The TC pays a 6.3% coupon on a $25 par value. The Trustee receives the interest payments from RRD and then pays out the TC coupon interest to the TC owners.
The owners of the TC are exposed to RRD's credit risk, so this is a high risk junky security to own. The current stock price is an indication that survival is in doubt.
The bond is currently rated deep into junk at B3. Bond Detail
On the day of my PYS purchase, the underlying bond owned by the trust closed at 97.06, creating a yield-to-maturity at that price of 7.095% and a current yield of about 6.49%. While the Bond Ghouls are expressly concern about survival in that yield, it does not reflect a likely bankruptcy event before maturity. That opinion seemed to justify a 10 share position in the TC that has a higher current yield and YTM than the underlying bond.
Current Yield at $18 = 8.75%
YTM: estimated at 11.56%
YTM assumes that RRD will survive to pay the principal amount when the bond matures on 4/15/29. Once the proceeds are received by the Trustee, the Trustee will then redeem the Trust Certificates at the $25 par value. So embedded in the YTM is a $7 per share profit in the bond based on an assumption, yet to be established and in doubt, that RRD will pay off the principal amount at maturity.
Interest Payments: Semi-Annual
Next Ex Interest Date: 4/13/21
Trades Flat as is the case with exchange traded bonds
Prior Sell Discussions: Item # 1 Sold 50 PYS at $23.3 (6/7/14 Post); Item # 3 Sold 50 of the TC PYS at $23.2 (4/14/2011 Post); Item # 2 Sold 50 PYS at $24 (11/18/2010 Post); Item # 2 Sold 50 PYS at $20.76 (7/28/2010 Post)
I bought a 5 share lot in another account at $17.82 on the same day.
Prior Trade PYS Round-Trip Snapshots: +$400.3
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| 2016 RRD 6.625% SU Maturing on 4/15/2029-Same Bond owned by the PYS Trust |
