Economy:
The BLS reported earlier today that the economy added 114,000 jobs last month. "The change in total nonfarm payroll employment for May was revised down by 2,000, from +218,000 to +216,000, and the change for June was revised down by 27,000, from +206,000 to+179,000. With these revisions, employment in May and June combined is 29,000 lower than previously reported." Employment Situation Summary - 2024 M07 Results
The unemployment rate rose .2% to 4.3%.
There is an ongoing slowdown in wage growth. "In July, average hourly earnings for all employees on private nonfarm payrolls increased by 8 cents, or 0.2 percent, to $35.07. Over the past 12 months, average hourly earnings have increased by 3.6 percent."
Another negative data point was that the average work week fell .1 hour to 34.2 hours.
The U-6 number jumped to 7.8% from 7.4% in June. Table A-15. Alternative measures of labor underutilization - 2024 M07 Results
Overall, the employment report was weak and is consistent with an economy that is slowing down in the third quarter.
The stock market turned negative on Thursday after ISM released its manufacturing survey for July 2024. The manufacturing PMI index was reported at 46.8%, down from 48.5% in June. Any number below 50 indicates an ongoing contraction. The new orders component was reported at 47.4%, down from 49.3%. The employment component fell to 43.4% from 49.3%.
For the week ending 7/27, the seasonally adjusted initial unemployment claims rose 14,000 to 249,000. Department of Labor New Release.pdf
Construction spending in June decreased at a seasonally adjusted .3% annual from the revised May number but was still up 6.2% compared to June 2023.
September rate cut 'on the table' if inflation data continues to cool: Powell The data supported a rate cut at the July meeting.
Private payroll growth slowed to 122,000 in July, less than expected, ADP says; ADP® Employment Report
In the Mastercard earnings report for the second quarter, the CEO noted "continued healthy consumer spending".
Euro zone inflation, July 2024 +2.6% with the core at 2.9%, both higher than the consensus. Euro area annual inflation up to 2.6% - Eurostat
Trump would be a 'triple whammy' for inflation if reelected, says Allianz's Ludovic Subran
China holds back on more stimulus, citing necessary 'pain'
There is a 100% probability that the FED will cut the federal funds range by a least 25 basis points at the September meeting. The odds of a 50 basis cut has increased to 70.5% earlier today from 22% yesterday.
10 Year Breakeven Inflation Rate as of 8/1/24: 2.2%
As of 7:50 A.M. today, the ten year treasury yield is trading at 3.842% yield, down 14 basis points. U.S. 10 Year Treasury Note Overview | MarketWatch
+++
Allocation Shifts Discussed in this Post:
Treasury Bills: $20,000 in principal amount
Corporate Bonds: None
Outflow Individual Common Stocks: -$3,696.18
(consisting of $3,873.12 in proceeds minus $176.94 in a purchase)
Stock Funds: +$312.1
Outflow Stocks/Stock Funds: -$3,384.08
Bond ETF: +$222.83
Exchange Traded Bonds (ARGD, EAI, ELC): +$771.97
EAI and ELC are exchange traded first mortgage bonds issued by Entergy operating subsidiaries.
2024 Outflow Stocks/Stock Funds: -$25,427.27
++++
Snapshot of Asset Allocation in my Fidelity and Vanguard Taxable Accounts as of 8/1/24:
 |
| Fidelity |
 |
| Vanguard |
The short term reserves in my Vanguard account consist entirely of a U.S. government money market fund. VMRXX-Vanguard Cash Reserves Federal Money Market Fund Admiral Shares | Vanguard (7 day SEC Yield at 5.3% as of 8/1/24). The yield will quickly adjust down with each FED rate cut.
The short term reserve percentage in my Fidelity accounts has been rising as I slow down the reinvestment of proceeds received from maturing investments. The Fidelity ® Government Money Market Fund (SPAXX) is similar to VMRXX but the expense ratio is .42% compared to .1%. That difference is reflected in a lower 7 day SEC yield for SPAXX which was 4.98% as of 8/1/24.
++
Trump and His Party:
Trump on Harris: "I’ve known her a long time indirectly, not directly very much, and she was always of Indian heritage. And she was only promoting Indian heritage. I didn’t know she was Black until a number of years ago when she happened to turn Black. Now she wants to be known as Black. So I don’t know — is she Indian or is she Black? I respect either one but she obviously doesn’t because she was Indian all the way, and then all of a sudden she made a turn and she became a Black person."
Trump is claiming that Harris changed her racial and ethnic identity for political gain. Harris has always identified as a black woman. She went to Howard University, a historically black college, where she joined Alpha Kappa Alpha, the nation's first sorority for black women. Her mother moved from India to the U.S. in 1958. Her father is from Jamaica. Contrary to Trump's representation that Harris only recently identified as black, Harris has throughout her career identified as being both black and south Asian. Fact check: Trump’s lie that Harris ‘all of a sudden’ embraced a Black identity
Trump also suggested that "somebody should look into" Ms. Harris's shift in racial and ethnic identity, a phase that is reminiscent of his claim that Obama was not a U.S. citizen. Trump was the most well known peddler of the Obama birther conspiracy.
Vance defends Trump over former president’s false claims about Harris’ racial identity Vance thinks that Trump's comments about Harris were "totally reasonable".
Trump has repeatedly claimed that he is the least racist person alive today. Trump says he is the ‘least racist person anywhere in the world TrumpWorld is truly Orwellian. Obama called Trump a bullshitter and there is a continuous stream of BS that flows from Trump's written and spoken words. The Bullshitter-in-Chief - Vox
Trump falsely calls Schumer a ‘proud member of Hamas’ - The Washington Post Schumer is the highest ranking Jewish politician in the U.S.
PolitiFact | Fact-checking Donald Trump’s rally in Charlotte, N.C.
Fact check: Minnesota campaign speech: Trump falsely claims again he deployed National Guard to Minneapolis in 2020 | CNN Politics Trump is incapable of being truthful. He knows that he can repeat demonstrably false claims over and over again for years and his True Believers will accept them as true. The Minnesota Governor deployed the National Guard in response to violence occurring after the police killed George Floyd in May 2020.
Trump tells Christians to vote, says they won't have to again if he wins
'In four years, you don't have to vote again,' Trump says | REUTERS - YouTube
“Autocracy Inc.” | Strategy Session Live w/ Anne Applebaum - YouTube
Fred Trump III calls uncle Donald Trump 'atomic crazy,' says he used racial slur decades ago - YouTube; Fred Trump III calls uncle Donald Trump 'atomic crazy,' says he used racial slur decades ago - ABC News Fred Trump III is Donald's nephew. His younger sister is Mary Trump. Both are children of Fred Trump Jr., a son of Fred Trump Sr.
"Vance VP" - Marsh Family parody adaptation of "Dancing Queen" by ABBA, on JD Vance - YouTube
J.D. Vance doubled down on his remarks that childless women do not have a direct stake in America. JD Vance doubles down on 'childless cat ladies' dig: 'I've got nothing against cats' He claimed that the Democrats were "anti-family" and "anti-child", which just added a new level of bizarre reality creations to his earlier comment. It’s not just ‘cat ladies’: JD Vance has a history of disparaging people without kids | CNN
This JD Vance response to a Paul Krugman tweet has made been resurrected as well:
J.D. Vance Endorsed Book That Calls Progressives “Unhumans” and Praises Jan. 6 Rioters
KFILE: Ohio Sen. JD Vance once called Trump a ‘moral disaster,’ and possibly ‘America’s Hitler (7/16/24). In that article, this exchange between Vance and a Kentucky Radio host Matt Jones in August 2016. Jones: "I cannot stand Trump because I think he's a fraud. Well, I think he's a total fraud that is exploiting these people"
Vance: "I do too. I agree with you on Trump, because I don't think that he is the person. I don't think he actually cares about folks".
Referring to Trump, Vance wrote "My god what an idiot" in a now deleted tweet. Vance has deleted a number of tweets where he made candid and accurate statements about Trump.
Vance: "I can't stomach Trump. I think that he's noxious and is leading the white working class to a very dark place." 'Hillbilly Elegy' Recalls A Childhood Where Poverty Was 'The Family Tradition' : NPR
Vance: "Mr. Trump is unfit for our nation's highest office". This statement was made by Vance in an opinion column published in the NYT. Opinion | Why Trump’s Antiwar Message Resonates with White America - The New York Times (4/4/16)
Trump-Endorsed Candidate JD Vance Once Said Trump Might Be ‘America’s Hitler’
Vance claims that Trump deserves credit for the prisoner exchange negotiated by Biden and Harris. Video: JD Vance credits Trump for prisoner swap Biden negotiated | CNN
JDVance Says People Without Kids Are ‘More Sociopathic’ Than Parents - YouTube JD and Dr. Phil need to go into therapy practice together.
"Vance VP" - Marsh Family parody adaptation of "Dancing Queen" by ABBA, on JD Vance - YouTube
J. D. Vance’s Sad, Strange Politics of Family | The New Yorker Vance was proud that his grandmother kept 19 loaded handguns laying around her small house, claiming that this was true to the "American spirit".
My Video: What Does J D Vance Really Think about Trump? - YouTube
Vance’s Links to the Project 2025 Leader Complicate Trump’s Attempts at Distance - The New York Times Vance wrote a forward for an upcoming book authored by the President of the Heritage Foundation "Dawn's Early Light". Read J.D. Vance’s Violent Foreword to Project 2025 Leader’s New Book | The New Republic Vance called on Americans "to circle the wagons and load the muskets". The publisher recently changed the title from "Burning Down Washington to Save America". Vance notes that Chief Justice Roberts is articulating a "fundamentally Christian view of economics and religion".
Elon Musk retweets altered Kamala Harris campaign ad An AI voice over has Harris saying that Biden is senile and she is the ultimate diversity hire. Musk violated his own policy by failing to note in his retweet that the altered video was a deep fake.
A half-million records and one app: The group behind a massive effort to ‘clean’ voter rolls | CNN Politics; Leaders of right-wing election conspiracy group jailed after being found in contempt of court | CNN Politics; Catherine Engelbrecht - Wikipedia
++++
Putin and His Orcs:
Losses ∙ Russia ∙ WarSpotting — documented material losses in Russo-Ukrainian war
Putin's troop losses set to reach one million in 2025 | Prof. Michael Clarke - YouTube
Ukrainian Drones Hit Russian Oil Depot in Polevaya, Kursk -- Three Tanks Burning - YouTube
Kyiv selecting Putin's 'valuable targets' as F-16s arrive in Ukraine | Justin Bronk - YouTube
++++
1. Small Ball Sells:
I have been selling equity REITs and regional banks stocks into their respective rallies:
Equity REIT Common and Preferred Stock Basket Strategy (ALEX, BNL, CTO, LXP)
Regional Bank Basket Strategy (FFIC, THFF, WASH - All Eliminations)
I am discussing about 1/2 of my sales this past week below. The other half will be discussed in my next post.
A. Eliminated THFF - Sold 20 at $45.7:
Quote: First Financial Corp. (Indiana) (THFF)
Proceeds: $913.97
First Financial Corporation "is the holding company for First Financial Bank N.A. First Financial Bank N.A., the fifth oldest national bank in the United States, operates 70 banking centers in Illinois, Indiana, Kentucky and Tennessee."
THFF Analyst Estimates | MarketWatch
SEC Filed 2024 Annual Report (branch locations can be found at pages 30-31;
Profit Snapshot: +$73.85
Dividend: Quarterly at $.45 per share
THFF Dividend History | Nasdaq
Prior to 2024, THFF paid a semiannual dividend. First Financial Corporation Declares Semi-Annual Dividend (5/17/23) The company went to quarterly dividend effective for the 2024 first quarter payment. First Financial Corporation Declares Quarterly Dividend (11/21/23)
Last Ex Dividend: 7/1/24 (owned as of)
Last Earnings Report (Q/E 6/30/24):
SEC Filed Earnings Press Release
Comparisons are to the 2023 second quarter.
E.P.S. $.96, down from $1.33
NIM 3.57%, down from 3.81%, but up from 3.53% in the 2024 first quarter.
"Net interest income for the second quarter of 2024 was $39.3 million, compared to $42.2 million reported for the same period of 2023, a decrease of $2.9 million, or 6.86%, driven primarily by higher interest expense. Interest income increased $4.5 million and interest expense increased $7.4 million year-over-year."
Efficiency Ratio: 64.56%, up from 58.01%
NPL Ratio: .5%, up from .43%
Charge off ratio: .59%, up from .2%
"Credit loss provision was $3.0 million compared to provision of $1.8 million for the second quarter 2023"
"The increase in provision as well as charge-offs discussed below were related to one previously identified credit, reflecting further deterioration in collateral values in the quarter."
Coverage Ratio: 240.85%, down from 300.1%.
ROE: 8.78%, down from 12.75%
Tangible Book Value per share: $36.04, up from $33.99.
Owned investment securities as of 3/31/24:
The net unrealized loss was at $14.8M as of 12/31/21, 2021 Annual Report at page 41, and at -$7.141M as of 9/30/21, 10-Q at page 2020.
There was just a massive failure throughout the banking industry to adjust the duration of owned securities in 2021 when inflation was running hot and the FED had nonetheless continued its interest rate suppression monetary policies through ZIRP and QE.
This is worth remembering. CPI was up 8.5% for the 12 month period ending on 3/31/22:
Consumer Price Index News Release - 2022 M03 Results
B. Pared Duplicate Position in CTO -Sold 10 at $19.34 (Fidelity Account):
Quote: CTO Realty Growth Inc. (CTO) - Externally Managed REIT
Proceeds: $193.4
The main CTO position is 120+ shares owned in my Schwab account with the AC per share at $17.66. The yield at that AC is 8.61%.
Real Estate Portfolio Summary:
In addition to owning real estate, CTO also provides management services to the publicly traded REIT Alpine Income Property Trust Inc (PINE) and owns about 15.8% of PINE's equity. 10-Q at page 20
Fees and Dividends Received from PINE in the second quarter: $1.294M (page 18, 10-Q)
CTO will also make mortgage and other commercial loans as more fully described at pages 16-17 of the last filed 10-Q for the Q/E 6/30/24 and summarised in the following table:
Weighted average shares diluted shares outstanding = 22,828,148 (if I multiplied that number by a $20 share price, the market capitalization would be about $456.563M.
While the original face amount of those loans total only $55.4M, they represent a significant percentage of this REIT's market capitalization
Last Discussed: Item # 1.B. Added to CTO - Bought 5 in Schwab Account at $17.13 (5/10/24 Post)(discussed 2024 first quarter report, SEC Filed Earnings Press Release); Item # 1.K. Added to CTO - Bought 1 at $16.49 (3/1/2024 Post)(discussed 2023 4th quarter report, SEC Filed Press Release)
Profit Snapshot: +$2.91
New Average cost per share this account: $16.95 (35 shares)
 |
| Snapshot Intraday on 7/24/25 after pare |
Dividend: Quarterly at $.38 per share ($1.52 annually)
Yield at $16.95: 8.97%
Last Ex Dividend: 6/13/24
Last Earnings Report (Q/E 6/30/24):
Revenues: $28.845M
AFFO and FFO numbers are what is attributable to the common shareholders after payment of the preferred stock dividend during the quarter.
Core FFO per share = $.45
AFFO per share: $.48
Reconciliation net income to AFFO:
As with other U.S. equity REITs, the noncash depreciation expense is the largest add back to GAAP net income.
The next largest add back will be stock compensation which was $750,000 in the second quarter.
Changes in the value of CTO's stock owneship in PINE may be an add back (if there is an unrealized decline in value) or a deduction (if there is an unrealized increase in value). In the second quarter, there was an increase of $663,000 so that amount was deducted in the FFO calculation.
One issue that I have is that there is no deduction for routine maintenance expenses which is normally a deduction from FFO when arriving at AFFO (See AFFO definition at NAREIT, a REIT industry association). CTO does provide at page 24 of its supplemental information about capital expenditures but does not breakdown how much was spent on routine maintenance (a deduction from FFO) or capital improvements that increase the value of the properties (not a deduction).
2024 Outlook:
Core FFO per share: $1.81 - $1.86
AFFO per share: $1.95 -$2.
SEC Filed Press Release; SEC Filed Investor Presentation; SEC Filed Supplemental
CTO Equity Preferred Stock: I also own the $25 par value equity preferred stock, CTO-PA, that has a 6.375% coupon. My AC per share is $18.89. {Last Discussed: Item #2.C. Added to CTOPRA - Bought 3 at $17.77 (11/11/23 Post); Item # 1.A. Bought 5 CTOPRA at $18.5; 2 at $17.8 (9/30/23 Post)}
There was a 3 for 1 stock split in 2022. CTO Realty Growth Announces Three-For-One Stock Split
C. Eliminated Duplicate CTO Position in Vanguard Account - Sold 25 at $19.98:
Proceeds: $499.49
See Item #1.B. above.
This account had my highest average cost per share.
Profit Snapshot: +$12.04
D. Pared BNL in Schwab Account - Sold 10 at $17.85:
Quote: Broadstone Net Lease Inc. (BNL) - Net Lease REIT
Proceeds: $178.54
Net Lease Definition and Types—Single, Double, Triple
This was my highest cost lot. Profitably selling the highest cost lots is one of the many stock risk management practices that I use.
"BNL is an industrial-focused, diversified net lease REIT that invests in primarily single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants."
As of June 30, 2024, "BNL owned a diversified portfolio of 777 individual net leased commercial properties with 770 properties located in 44 U.S. states and seven properties located in four Canadian provinces, comprising approximately 38.5 million rentable square feet of operational space . . . The ABR weighted average lease term and ABR weighted average annual minimum rent increase, pursuant to leases on properties in the portfolio as of June 30, 2024, was 10.4 years and 2.0%, respectively."
Sourced: SEC Filed Press Release
This REIT has been selling its healthcare properties. SEC Filed Press Release
Last Discussed: Item # 2.E. Added to BNL - Bought 5 at $14.57 (4/26/24 Post); Item # 1.I. Added to BNL - Bought 2 at $14.86 (3/1/24 Post)
Profit Snapshot: $16.38
New average cost per share this account: $14.87 (96+ shares)
 |
| Snapshot Intraday on 7/25/24 after pare |
Dividend: Quarterly at $.29 per share ($1.16 annually), last raised from $.285 for the 2024 second quarter payment.
BNL Dividend History | Seeking Alpha
Yield at $14.87 AC = 7.8%
Last Ex Dividend: 6/28/24 (owned all as of)
Last Earnings Report (Q/E 6/30/24): Released after this pare.
SEC Filed Press Release and SEC Filed Supplemental
Revenue: $105.907M
FFO per share: $.37
AFFO per share: $.38
Net income to AFFO Reconciliation:
"Portfolio was 99.3% leased based on rentable square footage, with only three of our 777 properties vacant and not subject to a lease at quarter end."
E. Eliminated WASH - Sold 10 at $32.32:
Quote:Washington Trust Bancorp Inc. (WASH)
Proceeds: $323.14
Profit Snapshot: $4.64
As discussed in my last post, I had a negative reaction to the second quarter earnings report. Item # 2.I. Eliminated WASH in my Schwab Account - Sold 14+ st $32.2 (7/26/24 Post); SEC Filed Earnings Press Release
WASH Realized Gains to Date: $2,724.68
The total includes a recent elimination in a ROTH IRA account.
Most of the total gain was realized in two vintage transactions. Item # 2. Sold 50 of 100 WASH at $22.44 (1/5/11 Post)(profit snapshot +$347.03); Item # 2. Eliminated WASH-Sold 50 at $61.53 (6/25/18 Post)(profit snapshot = $2,309.26)
Current Position: None.
F. Eliminated MMM - Sold 3+ at 121.19:
Quote: 3M Co. (MMM)
Proceeds: $484.28
MMM Analyst Estimates | MarketWatch
3M Completes Spin-off of Solventum (SOLV) MMM investors received 1 shares of SOLV for 4 MMM shares.
Profit Snapshot: Net of +$40.62
Dividend: Quarterly at $.70 per share, slashed from $1.51 effective for the 2024 second quarter payment. The slash was partly in response to the SOLV spinoff.
3M's stock surges to 16-month high after dividend cut was less than feared | Morningstar (5/15/24)
Last Ex Dividend: 5/23/24
Last Earnings Report (Q/E 6/30/24): On 7/26/24, MMM reported better than expected second quarter earnings that resulted in the stock registering its largest daily percentage gain in over 40 years.
In a comment published on 7/27/24, I mentioned that I sold into that rally since I did not want to read the 10-Q discussion of the lingering and significant liabilities including the remaining liabilities arising from the forever chemical PFAS. 10-Q at pages 24-46
Highlights:
Sourced: SEC Filed Earnings Press Release for the Q/E 6/30/24
Current Position: None.
G. Pared UL - Sold 10+ at $60.41:
Quote: Unilever PLC ADR (UL)
Proceeds $628.63:
I sold my highest cost lots using the specific identification method.
ADR Ratio: 1/1
Ordinary shares are priced in British Pence: Unilever PLC (ULVR.L)
100 Pence = 1 Pound
British Pound to US Dollar Exchange Rate Chart | XeUL SEC Filings (foreign company SEC Forms)
UL Analyst Estimates | MarketWatch
Unilever ADRs use to trade under both the UL and UN symbols, with the later being the Unilever based in the Netherlands whose ordinary shares were traded in Euros. The two entities combined with UL being the surviving ADR with its ordinary shares traded in British Pence. Completion of Unilever’s Unification | Unilever
Last Discussed: Item # 2.B. Eliminated Duplicate Position in UL - Sold 28+ at $54.71 (5/31/24 Post)(profit snapshot = $100.95)
Profit Snapshot: $47.23
New average cost per share: $48.61 (30+ shares)
 |
| Snapshot Intraday on 7/26/24 after pare |
Dividend: Quarterly at a variable rate
Unilever PLC Common Stock (UL) Dividend History | Nasdaq
The ADR price will generally reflect the price in British pence converted into USDs.
Next Dividend: $.4773 per share.
Last 4 Dividends: $1.86 per ADR share
Yield at $1.86 Annual Rate Using $48.61 AC = 3.83%
Last Earnings Report (Semiannual Period Ending 6/30/24):
The shares popped in response to this report.
I attribute the positive response to the 4.1% increase in revenue which importantly included a 2.6% increase in volume, the increase in operating margin, free cash flow generation and the increase in E.P.S.
Starting in 2022, consumer product companies experienced a rapid rise in input costs that led to significant price increases and to lower volumes. Organic sales may have grown some, but that was due to the revenue generated by price increases offsetting declines in volumes as customers responded by buying fewer products or substituting cheaper products for the brand names.
It is important to see volume increases with modest price increases, leading to increased profits and higher operating margins.
Unilever is based in the U.K. which does not currently have a dividend withholding tax. There will be a small fee taken out of the dividend to compensate the ADR custodian.
As with other European companies, UL only reports volumes in the first and third quarters. Earnings reports occur only semiannually.
Last Buy Discussions: Item # 1.D. Added to UL in Fidelity Account - Bought 3 at $47 (1/26/24 Post); Item # 1.E. Bought 2 UL at $47.16 (11/25/23 Post); Item # 2.F. Added to UL - Bought 1 at $48.12; 3 at $48.36 (11/18/23 Post); Item # 1.P. Added to UL in Fidelity Account - Bought 1 at $43.03 (4/25/22 Post); Item #2.I. Added to UL in Fidelity Taxable Account - Bought 2 at $42.55 (6/9/22 Post)
Other Recent Sell Discussion: Item # 5.A. Eliminated UL in Vanguard Account - Sold 8 at $55.33 (4/29/23 Post)(profit snapshot = $34.47 )
UL/UN Realized Gains to Date: $3,819.07 (see other profit snapshots at Item # 5.A.)
The preceding total includes an elimination in a Roth IRA account a few days ago:
 |
| UL 7+ Shares +$70.06 |
Largest Gain: $2,512.5 on 70 shares sold in 2018
H. Eliminated Duplicate Position in ALEX - Sold 11 at $19.81 (Schwab Account):
Quote: Alexander & Baldwin Inc. (ALEX) - A REIT
Proceeds: $217.9
ALEX " is a fully integrated real estate investment trust ("REIT") headquartered in Honolulu, Hawai‘i, whose history in Hawai‘i dates back to 1870. Over time, the Company has evolved from a
Last Discussed: Item # 2.M. Bought 5 ALEX at $20.85 (5/12/22 Post) Those shares are still owned in another taxable account.
Profit Snapshot: $37.5
Dividend: Quarterly at $.2225 ($.89 annually), last raised from $.22 effective for the 2023 4th quarter payment.
Last Ex Dividend: 6/14/24
Last Earnings Report (Q/E 6/30/24):
Revenue: $51.047M
FFO per share $.28
AFFO per share $.23
Reconciliation Net Income to AFFO: ALEX does deduct routine maintenance expenses and noncash revenue created by the straight line accounting convention from FFO to arrive at AFFO. nie
Occupancy: 93%
Remaining Position Taxable Accounts: 22+ shares
I. Pared LXP in Schwab Account - Sold 20 at $10.53:
Quote: LXP Industrial Trust (LXP)
Proceeds: $210.69
I sold my highest cost lots.
Management: Internal
Last Discussed: Item # 1.D. Eliminated Duplicate Position in LXP - Sold 20 at $10.29 - Fidelity Account (7/26/24 Post) I discussed the first quarter report in that post.
Profit Snapshot: $23.61
Average cost per share before pare: $8.64
Average cost per share after pare: $8.41 (60 shares)
 |
| Snapshot Intraday on 7/31/24 after pare |
Dividend: Quarterly at $.13, last raised from $.125 effective for the 2023 4th quarter payment, but slashed from $.1775 to $.1025 effective for the 2019 first quarter.
LXP Industrial Trust (LXP) Dividend History | Seeking Alpha
The dividend slash was in response to LXP selling 21 office properties in September 2018. Lexington Realty Trust Announces Disposition of 21 Office Assets for $726 Million to Joint Venture
Yield at New AC = 6.18%
Last Ex Dividend: 6/28/24
Last Earnings Report (Q/E 6/30/24):
Revenue: $85.786M, down from $87.05M
AFFO per share: $.16, down from $.18 in the 2023 second quarter.
Funds Available for Distribution (FAD): $38.718M, down from $46.43M
FAD per share: $.13087
(Dividend $38.718M by 296.32592M diluted shares)
Reconciliation Net Income to FAD:
One reason for the Y-O-Y decline in FAD was the increase in "Second generation lease costs to $8.15M from $1.401M.
LXP defines those costs as follows: "Second Generation Costs: Represents cash spend for tenant improvements and leasing costs to maintain revenues at existing properties and are a component of the FAD calculation."
"First Generation Costs: Represents cash spend for tenant improvements, leasing costs and expenditures contemplated at acquisition for recently acquired properties with vacancy."
Non-cash revenues created by the straight line accounting convention is also deducted from AFFO in the FAD calculation. Pretend cash is not available for distribution.
"LXP now estimates that its net income attributable to common shareholders for the year ended December 31, 2024 will be within an expected range of $0.10 to $0.13 per diluted common share. LXP is tightening its estimated Adjusted Company FFO for the year ended December 31, 2024, to be within an expected range of $0.62 and $0.65 per diluted common share."
Ongoing Development Projects:
LXP sold its last 2 remaining office properties and its property portfolio is now 100% industrial assets.
LXP reported FAD per diluted share of $.25 in the 2014 second quarter. SEC Filed Press Release for the Q/E 6/30/2014 For 2014, FAD per share was reported at $.86. Annual Report at page 11
AFFO per share in the second quarter of 2022 was $.17, down from $.18 in the 2021 first quarter. FAD per share was reported at $.155 in the 2022 2dn Q. SEC Filed Earnings Press Release for the Q/E 6/30/22
While LXP made the right choice to jettison its office properties, the decline in FFO and FAD per share over the past 10 years, the lack of a meaningful upswing in recent years, and the dividend slash from $.1775 to $.1025 in the 2019 second quarter, militate against a significant dollar exposure. And, the poor performance using per share data indicates that a buy the dip, sell the rip, even small ones, is necessary to achieve a satisfactory total return.
LXP Realized Gains to Date: $2,013.85
J. Eliminated FFIC - Sold 13+ at $16.62:
Quote: Flushing Financial Corp. (FFIC)
Proceeds: $223.08
FFIC Analyst Estimates | MarketWatch
Profit Snapshot: $85.95
Last Discussed: Item # 4.C. Eliminated Duplicate Position in FFIC - Sold 10+ at $14.05 (7/29/23 Post)(profit snapshot = $30.7); Item # 1. Eliminated FFIC in 1 Taxable Account - Sold 5 at $23.4 (2/17/22 Post)(profit snapshot = $58.91)
Last Buy Discussion: 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)
Dividend: Quarterly at $.22 per share, last raised from $.21 effective for the 2022 first quarter payment. In 2014, the quarterly dividend was at $.15.
Flushing Financial Corporation (FFIC) Dividend History | Seeking Alpha
Last Ex Dividend: 6/10/24 (owned as of)
Last Earnings Report (Q/E 6/30/24):
Flushing Financial 2Q24 Earnings Press Release
Comparisons are to the 2023 second quarter.
E.P.S. $.18, down from $.29
Core E.P.S. $.18, down from $.26
NIM 2.05%, down from 2.18%
Net Interest Income: $42.776M, down from $43.378M
Efficiency Ratio: 82.57% (way too high IMO), up from 73.82% (up is a negative for this ratio)
NPL Ratio: .51%, up from .27%
NPA Ratio: .61%, up from .47%
Coverage Ratio: 120.58%
Charge Off Ratio:Net recovery of .01%
Tangible Book Value per share: $22.24, down from $22.47
Other Sell Discussions: Item # 2 Sold 50 FFIC @ $14.51 (5/2/11 Post); Item # 4 Sold 50 FFIC at $13.53 (10/31/11 Post)(profit snapshot in 10/31/11/ Post at $200.7); Item # 2.H. Pared FFIC-Sold 10 at $14.05 and 5 at $16 (12/19/20 Post)(profit snapshot = $39.96); Item # 1.H. Eliminated FFIC in Vanguard Taxable Account-Sold 10 at $18.85 (2/6/21 Post)(profit snapshot = $82.28); Item # 1.E. Pared FFIC-Sold 5 at $24.52 (4/9/21 Post)(profit snapshot = $63.93); Item # 1.E. Sold 5 FFIC at $23.4 (2/17/22 Post)(profit snapshot = $58.91)
FFIC Realized Gains to Date: $560.95
2. Treasury Bills Purchased at Auction:
A. Bought 5 Treasury Bills at the 7/29/24 Auction:
91 Day Bill:
Matures on 10/31/25
Interest: $65.03
Investment Rate: 5.285%
B. Bought 5 Treasury Bills at the 7/29/24 Auction - 2 Accounts:
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182 Day Bill
Matures on 1/30/25:
Interest: $124.62
Investment Rate: 5.126%
C. Bought 5 Treasury Bills at the 7/31/24 Auction:
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119 Day Bill
Matures on 12/3/2024
Interest: $84.13
Investment Rate: 5.249%
3. Corporate Bond ETFs:
A. Started SCHI - Bought 5 at $44.57:
Quote: Schwab 5-10 Year Corporate Bond ETF Overview
Cost: $222.83
Sponsor's website: SCHI
"The investment seeks to track as closely as possible, before fees and expenses, the total return of the Bloomberg US 5-10 Year Corporate Bond Index. . . . The index measures the performance of U.S. investment grade, taxable corporate bonds with maturities greater than or equal to five years and less than ten years that have $300 million or more of outstanding face value. It is the fund's policy that under normal circumstances it will invest at least 90% of its net assets in securities included in the index."
Expense Ratio: .03%
Holdings as of 6/30/24: 2,192
Weighted average maturity as of 6/29/24: 7.4 years
Effective Duration as of 6/29/24: 6.13 years
Weighted average coupon as of 6/29/24: 4.22%
SCHI Page at Morningstar (currently rated 4 stars)
Dividends: Paid monthly at a variable rate.
Schwab 5-10 Year Corporate Bond ETF (SCHI) Dividend History | Nasdaq
Last Ex Dividend: 7/1/24
4. TIP Purchase Roth IRA account:
A. Bought 1 TIP 1.375% Coupon Maturing on 7/15/33 at a Total Cost of 94.99218:
Principal Amount: 94.99218 x. 10 = 949.92
Original Issued: 7/31/23
Inflation Factor: 1.03373
Sourced from TIPS/CPI Query Results — TreasuryDirect
Multiply 949.92 x. inflation factor of 1.03373 = $981.96, paid to the seller
Accrued Interest paid to the seller: $.39. The last semiannual payment was on 7/15/24.
I will receive the inflation accretion to the principal amount starting on 7/26/24.
Real Yield: 1.987%
How Do I Calculate the Yield of an Inflation Adjusted Bond?
I have started to extend the maturities of my TIP ladder. I have 2 that mature in January 2025 and 4 in April 2025, both in my Vanguard Roth IRA account:
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| Third Party Price as of 7/26/24 |
Almost all of the total return for those two maturies will be in the inflation accretion to the principal amounts given the low coupons. The coupon is paid on the inflation adjusted principal amount.
When calculating "profit" for a TIP purchase, the cost basis used in the Vanguard's calculation is not what I actually paid for the TIP, but appears to be the original principal amount as accreted by inflation since purchase.
To calculate a total return, I can not use the difference between the adjusted cost basis and the redemption proceeds paid at maturity, but have to subtract the original cost from the redemption proceeds and then add the actual interest payments.
Since I have never owned a TIP in a taxable account, I have not researched the tax accounting issue, and do not intend to ever do so.
Adding the inflation accretion to the cost basis makes sense when held in a taxable account since the owner has to pay a tax on the accrued interest, even though the interest is not "received" until the TIP is redeemed or sold.
To avoid double taxation of the interest accretion, the cost basis would have to be increased to reflect the interest accretion to the principal amount.
It does not make sense to do this accounting when the TIP is held in a Roth IRA account since I am not paying a tax on the accrued interest.
The accounting done by Vanguard requires me to look at my original confirmation to see how much was paid to the seller (price + the inflation factor) or at auction in order to do a total return calculation.
What Are Treasury Inflation-Protected Securities (TIPS)?
TIPS and Inflation | Charles Schwab
5. Exchange Traded Bonds:
The rationale for increasing my exposure in this category is that the FED is highly likely to cut rates at least 25 basis points in September and possibly as much as 50 basis points, which will lower the yields of short term securities like Treasury Bills and short term corporate bonds. An important consideration is that I have an extreme overweight in short term treasury bills, corporate bonds and CDs.
Par Value $25
Trade like stocks on the stock exchange.
Trade Flat, meaning whoever owns on the ex interest date receives the entire quarterly interest payment, which is how stocks trade.
A. Added to ELC in Fidelity Account - Bought 10 at $22.1:
Quote: Entergy Louisiana LLC Mortgage Bonds 4.875% Series due 2066 (ELC)
Cost $221
Entergy Louisiana is an operating subsidiary of the utility holding company Entergy Corp. (ETR).
I discussed this exchange traded first mortgage bond in my last post. Item # 5.A.
Coupon: 4.875% paid on a $25 par value
Interest Payments: Quarterly
First Mortgage Bond, with lien attaching to substantially all assets.
New Average cost per share: $21.67 (70 shares)
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| Snapshot Intraday 7/26/24 after add |
Yield at new AC = 5.62%
(.04875% coupon x. $25 par value = $1.21875 annual interest per share ÷ $21.67 average cost per share = 5.6241%)
Next Ex Interest Date: 8/30/24.
Credit Ratings: A2/A
I own a number of first mortgage bonds issued by utility operating companies. Most of them are $1,000 par value bonds purchased in the bond market. The most recent purchase was 1 Entergy Louisiana 3.78% FM bond maturing on 4/1/25. Item # 4.C. (6/28/24 Post)(YTM at TC was then at 5.59%)
For exchange traded first mortgage bonds with $25 par values, I own EAI, ELC, and EMP.
As previously discussed, I prefer buying the $1,000 par value bonds maturing in 2028 or earlier since I can control the interest rate risk with those short term bonds which is a major issue with owning ELC.
B. Added to ELC in Schwab Account - Bought 10 at $21.98:
Cost: $219.8
See Item #5.A. above.
Average cost per share this account: $21.28 (40 shares)
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| Snapshot Intraday on 7/30/24 after add |
Yield at AC = 5.727%
C. Added to EAI in Vanguard Account - Bought 10 at $22.07:
Quote: Entergy Arkansas 1st Mortgage Bonds 4.875% due 2066 (EAI)
Cost: $220.7
Issuer: Wholly owned operating subsidiary of Entergy Corp. (ETR)
Last Discussed: Item # 7.A. Added to EAI in Vanguard Account - Bought 5 at $21.7; 10 at $21.5; 10 at $21.27 (5/24/24 Post); Item # 6.A. Added to EAI in Vanguard Taxable Account - Bought 10 at $21.64 and Item # 6.B. Added 20 EAI in My Fidelity at $21.62 and Added 30 at $21.5 in my Schwab Account (12/30/23 Post); Item # 6.B. Added 5 EAI at $21.6 - Vanguard Taxable Account (12/16/23 Post); Item # 5. Added to EAI in Schwab Account - Bought 5 at $21.5; 5 at $21.22 (11/25/23 Post); Item # 5.B. Added 5 EAI at $20.1; 5 at $19.85 - Schwab Account (10/21/23 Post); Item # 7.A. Added to EAI in Schwab Account - Bought 5 at $20.62; 5 at $20.36 (10/14/23 Post)
Current Position in Taxable Accounts: 270 shares
Average cost per share this account: $22.14 (70 shares)
Yield at $22.14: 5.5%
Next Ex Interest: 8/30/24
First Mortgage bond with lien attaching to substantially all assets.
Par Value: $25
Coupon: 4.875%
Maturity: 9/1/66
Issuer Optional Redemption: At par value + accrued and unpaid interest on or after 9/1/2021.
Trades Flat (whoever owns the security on the ex interest date receives the entire quarterly interest payment)
Interest Payments: Quarterly
I owned 3 Entergy Arkansas 3.7% first mortgage bonds ($1,000 par value) that matured on 6/1/24.
I still own 3 Entergy Arkansas 3.5% first mortgage bonds ($1,000 par value) that mature on 4/1/2026. Bond Page | FINRA.org
D. Added to ARGD - Bought 5 at $22.1:
Quote: Argo Group International Holdings Ltd. 6.5% Senior Notes Due 2042 (ARGD)
Cost: $110.47
The issuer was acquired by Brookfield Reinsurance Ltd. (BNRE) and now operates as a wholly owned subsidiary of BNRE. It is my understanding that BNRE is not legally obligated to pay this debt obligation but is unlikely to allow a default having paid cash to acquire Argo. Brookfield Reinsurance Completes $1.1 Billion Acquisition of Argo Group
Cost: $110.47
Last Discussed: Item # 7.A. Added to ARGD - Bought 5 at $21.84 (5/17/24 Post); Item # 5.A. Added to ARGD - Bought 5 at $21.97 (12/2/23 Post)Final Prospectus Supplement
New Average cost per share: $22.58 (125 Shares)
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| Snapshot Intraday on 7/26/24 after add. |
Current Yield at AC = 7.12%
(.065% coupon x. $25 par value = $1.625 annual interest per share ÷ $22.58 average cost per share = 7.12%)
A YTM would be about 7.48%, using this calculator. Yield to Maturity Calculator | Calculate YTM The YTM assumes that all interest payments are made and the bond is paid off on the 9/15/42 maturity date. If the bond was called at par value five years from now, which would be at the issuer's option, the YTM would increase to 8.92%.
Next Ex Interest Date: 8/30/24
Credit Rating: AM Best rates the SU debt at BBB-. AM Best Removes Under Review With Developing Implications; Affirms Credit Ratings of Argo Group International Holdings, Inc. and Its Subsidiaries
ARGD-AGIIL Realized Gains to Date: $653.79
Purchase Restriction: Each purchase must lower my average cost per share. The maximum position is 150 shares. With interest rates trending down, the yield becomes more attractive to me.
6. Small Ball Buys:
I will likely continuing adding 1 to 3 share lots in BOTZ and IRBO provided each subsequent purchase can be made at the lowest price in the chain.
A. Added 1 BOTZ at $30.56, 1 at $29.89; 3 at $29.54:
Quote: Global X Robotics & Artificial Intelligence ETF
Cost: $149.07
Sponsor's website: Global X Robotics & Artificial Intelligence ETF (BOTZ)
Expense ratio: .68%
Last Discussed: Item # 2.E. Restarted BOTZ - Bought 5 at $31.33 (7/19/24 Post)
New Average cost per share: $30.57 (10 shares)
Last Sell Discussions: Item # 1.B. Eliminated BOTZ - Sold 9 at $26.53 (5/20/23 Post)(profit snapshot = $15.39); Item # 1.J. Sold 5 BOTZ at $39.02 (10/22/21 Post)(profit snapshot = $74.52)
BOTZ - Morningstar (unrated)
BOTZ – Portfolio: Morningstar (lists top 25 holdings)
B. Added 1 IRBO at $33.11; 4 at $32.48:
Quote: IRBO | iShares Robotics & Artificial Intelligence Multisector ETF Overview
Last Discussed: Item # 2.G. Restarted IRBO - Bought 5 at $33.93 (7/12/24 Post)
Sponsor's website: iShares Robotics and Artificial Intelligence Multisector ETF | IRBO
Expense Ratio: .47%
New average cost per share: $33.27 (10 shares)
Last Sell Discussion: Item # 1.I. Eliminated IRBO - Sold 2 at $33.5 (10/2/2021 Post)(profit snapshot = $32.87)
IRBO Page at Morningstar (rated 2 stars)
IRBO – Performance - Morningstar - Wild.
Quote: UMH Properties Inc. (UMH) - A REIT that rents and sales manufactured homes.
Cost: $176.74
10-Q for the Q/E 3/31/24 As of 3/31/24, UMH "Owns and operates
I have never owned the common stock.
I did start a small ball position in a UMH preferred stock, UMH-PD, and currently own only 10 shares. Item # 6.C. Added to UMHPRD - Bought 5 at 20.28, Bonds (10/7/23 Post); Item # 5.A. Started UMHPRD - Bought 5 at $21.23 (8/26/23 Post) This equity preferred stock has a 6.375% coupon paid on a $25 par value. The yield at my average cost per share is 7.68%. I intend to add to that position when and if the price sinks below $20.
2nd Quarter Operations Update (7/10/24): SEC Filing This is not the second quarter earnings report.
Dividend: Quarterly at $.215 ($.86 annually), last raised from $.205 effective for the 2024 second quarter payment.
Yield at $17.57: 4.89%
Next Ex Dividend: 8/15/24
Last Earnings Report (Q/E 3/31/24):
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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.
