Economy:
US Jobs Report December 2019: 145,000 payrolls added, 3.5% unemployment rate The consensus estimate was for 165K new jobs. While the last two months of 2019 may be revised in the January and February employment reports, the monthly average job growth for 2019 now stands at 176K, the slowest pace since 2011. Notwithstanding the Fed's rate cuts and the GOP's tax cuts for corporations, payroll growth in 2019 fell to 2.1M positions from 2.7M in 2018.
The average work week remained unchanged at 34.3 hours.
Wage growth was disappointing at just 3 cents per hour. Wage growth has been slowing for several months. The Y-O-Y increase in wages was 2.9% through December 2019. During Trump's tenure as President, the high was hit last February at 3.4%.
Employment gains for October and November were revised down by 14K.
Employment Situation Summary
Annual Wage Growth (drifting down some since topping out at 3.4% in February 2019)
October 2019 3% Employment Situation News Release
August 2019: 3.2% Employment Situation News Release
July 2019: 3.2% Employment Situation News Release
June 2019: 3.1% Employment Situation News Release
May 2019: 3.1% Employment Situation News Release
April 2019: 3.1% Employment Situation News Release
March 2019: 3.2% Employment Situation News Release
February 2019 3.4% Employment Situation News Release
September 2018 2.8% Employment Situation News Release
July 2018 2.7% Employment Situation News Release
April 2018 2.6% Employment Situation News Release
January 2018 2.9% Employment Situation News Release
December 2016 2.9% Employment Situation News Release
The average work week remained unchanged at 34.3 hours.
Wage growth was disappointing at just 3 cents per hour. Wage growth has been slowing for several months. The Y-O-Y increase in wages was 2.9% through December 2019. During Trump's tenure as President, the high was hit last February at 3.4%.
Employment gains for October and November were revised down by 14K.
Employment Situation Summary
Annual Wage Growth (drifting down some since topping out at 3.4% in February 2019)
October 2019 3% Employment Situation News Release
August 2019: 3.2% Employment Situation News Release
July 2019: 3.2% Employment Situation News Release
June 2019: 3.1% Employment Situation News Release
May 2019: 3.1% Employment Situation News Release
April 2019: 3.1% Employment Situation News Release
March 2019: 3.2% Employment Situation News Release
February 2019 3.4% Employment Situation News Release
September 2018 2.8% Employment Situation News Release
July 2018 2.7% Employment Situation News Release
April 2018 2.6% Employment Situation News Release
January 2018 2.9% Employment Situation News Release
December 2016 2.9% Employment Situation News Release
+++++
Markets and Market Commentary:
This basket of dividend growth stocks can help your portfolio stand out in 2020 - MarketWatch Of the 12 stocks mentioned in that article, I currently have small positions in IBM and AT & T. I recently bought and sold two others: Macy's and Huntington Bancshares.
Middle-income households haven’t recovered since the Great Recession — here’s a reason why - MarketWatch
Weakness in several box retailers continues: Kohl's shares tank on dismal holiday sales results, lowered outlook; Bed Bath & Beyond Plunges on Earnings Miss, Withdrawn Guidance - TheStreet
Boeing messages reveal efforts to manipulate regulators of 737 Max One Boeing employee described the 737 MAX as an "airplane is designed by clowns who in turn are supervised by monkeys.” I can not rationally explain why the Stock Jocks are keeping BA's price near current levels. BA 5 Year Chart
Companies issue high grade debt at one of the fastest paces ever U.S. corporations sold $69B in investment grade debt last week. The world's parabolic increase in debt continues with the pedal to the metal.
Global debt surged to a record $250 trillion in the first half of 2019, led by the US and China This will not end well. And, there is no will to change the now inevitable debt bomb explosion. The only question is when will the debt bubble burst.
++++
Portfolio Allocation & Management:
The stock allocation remains at less than 10%.
As long as I am able to generate a 8% to 10% total return with a standard deviation less than 2.5, which I accomplished last year, then I am not going to become more aggressive unless the bottom falls out of the stock market that provides me with what I would consider a suitable cushion.
On a total portfolio basis, the stock allocation is currently close to 5% after selling two mutual funds this year and paring the allocation meaningfully last year.
The Fidelity taxable account is the most aggressive of 4 taxable brokerage accounts:
The short term allocation includes the money market account, CDs and treasury bills. About 25% of the portfolio is currently inhabiting a MM account earning about 1.25%. I would like to see stocks go down now by at least 20%, preferably 50%.
With this allocation holding steady for most of 2019, this account experienced a total return of 8.9%.
The 3 year standard deviation in the Fidelity taxable account was 2.41 through last December. The standard deviation over past 3 years for the iShares Core U.S. Aggregate Bond ETF (AGG) was 2.91% which produced annual average total returns of 3.99%, 3% and 3.65% over the past 3, 5, and 10 years respectively.
Standard Deviation and Risk
I estimate that the bond allocation has a weighted average rating of AA- (possibly A+). The CDs are FDIC insured from solid banks and are unrated by any credit agency which is the norm. For internal purposes, I assign them a AAA rating.
I sold a large number of intermediate corporate bonds last year and a number of bonds were redeemed early by the issuer. As I mentioned in a recent comment, it took 17 snapshots to capture the fixed income portion of this account. The number of snapshots would probably have been close to 30 before I started to pare my investment grade bond portfolio and net redemptions from corporate issuers during the year.
The weighting of the bond portfolio is in short maturities with the average weighted average maturity less than the Barclay's Aggregate U.S. Bond Index:
The non-investment grade bonds are holdovers from my junk bond ladder strategy. The unrealized gain in those bonds is close to $500.
The long term bond allocation is almost entirely in high quality Tennessee Municipal bonds.
I am increasing the risk in my smallest account which is a Fidelity Roth IRA. That account was almost entirely in short term corporate bonds last year. As those bonds mature, and lacking suitable yield investment in similar securities, I am turning toward small ball trading of high yielding common stocks. The general goal is to earn a total return in excess of the dividend yield. I am selling and buying small lots using the small ball trading rules.
I own Tennessee Municipal bonds in 3 taxable accounts.
These are the municipal bonds that I currently own in my Fidelity account (all of the following snapshots taken on 1/11/2020):
Chattanooga Electric: AA+ (Fitch), AA (S & P)
City of Kingsport GO: Aa2 (Moody's)
City of Knoxville Electric: Aa2 (Moody's); AA (S& P)
City of Knoxville Gas: Aa2 (Moody's); AA (S& P)
City of Springfield GO: Aa3 (Moody's)
Dickson County GO: AA (S & P)
Johnson City: Aa2 (Moody's)
Knox County GO: AA+ (S & P); Aa1 (Moody's)
Maryville GO: Aa3 (Moody's); AA+ (S & P)
Maury County GO: Aa2 (Moody's)
Memphis GO: AA (S &P); Aa2 (Moody's)
Memphis Water: Aa1 (Moody's); AAA (S & P)
Montgomery County GO: AA+ (S & P)
Nashville/Davidson County GO: AA (S&P) Aa2 (Moodys)
Shelby County-Methodist Le Bonheur Healthcare: A1 (Moody's); AA- (S & P)
Sumner County GO: AA+ (S & P)
Sullivan County GO: Aa2 (Moody's)
Washington County GO: AA (S & P); Aa2 Moody's
Williamson County GO: Aaa (Moody's)
+++
The standard deviation for my Schwab account is currently at 1.45:
I would estimate that the weighted average credit weighting for the fixed income securities is AA+. There is over a 30% weighting in U.S. treasury bills (all maturities within 12 months) and the largest weighting in CDs for any account. I assign those fixed income securities with AAA weightings.
The Tennessee municipals have a lower weighting in my Schwab account than the U.S. treasuries and consist of the following:
The price appreciation of this Harpeth Valley Utility bond is restrained by the optional call date. The issuer can call this 4% AA+ rated bond on or after 9/1/22. Optional call provisions will impact price.
The Rutherford County bonds are rated AAA. S & P assigns a AAA to Knoxville's water bonds.
The Vanguard taxable accounts has no individual common stocks and a common stock fund weighting of less than 1%.
I did not look at the weightings in my IB account which has the highest weightings in preferred stocks, high quality short term corporate bonds and REITs. I did increase my preferred stock weighting in that account during 2019 through purchases of Canadian reset equity preferred stocks.
All four taxable brokerage accounts were up yesterday with the S & P 500 declining .29%.
Overall my CD weightings are declining now since I am not reinvesting the proceeds into CDs given the decline in rates. At Fidelity, I would have to go out to a 2024 maturity to pick up a 2% yield. The highest CD rate is 2.5% and that one matures in 2035.
The lack of yield alternatives is one fuel source for the parabolic stock rise. Another fuel source is spending trillions per year of borrowed money.
Middle-income households haven’t recovered since the Great Recession — here’s a reason why - MarketWatch
Weakness in several box retailers continues: Kohl's shares tank on dismal holiday sales results, lowered outlook; Bed Bath & Beyond Plunges on Earnings Miss, Withdrawn Guidance - TheStreet
Boeing messages reveal efforts to manipulate regulators of 737 Max One Boeing employee described the 737 MAX as an "airplane is designed by clowns who in turn are supervised by monkeys.” I can not rationally explain why the Stock Jocks are keeping BA's price near current levels. BA 5 Year Chart
Companies issue high grade debt at one of the fastest paces ever U.S. corporations sold $69B in investment grade debt last week. The world's parabolic increase in debt continues with the pedal to the metal.
Global debt surged to a record $250 trillion in the first half of 2019, led by the US and China This will not end well. And, there is no will to change the now inevitable debt bomb explosion. The only question is when will the debt bubble burst.
++++
Portfolio Allocation & Management:
The stock allocation remains at less than 10%.
As long as I am able to generate a 8% to 10% total return with a standard deviation less than 2.5, which I accomplished last year, then I am not going to become more aggressive unless the bottom falls out of the stock market that provides me with what I would consider a suitable cushion.
On a total portfolio basis, the stock allocation is currently close to 5% after selling two mutual funds this year and paring the allocation meaningfully last year.
The Fidelity taxable account is the most aggressive of 4 taxable brokerage accounts:
 |
| As of 12/31/19 |
With this allocation holding steady for most of 2019, this account experienced a total return of 8.9%.
The 3 year standard deviation in the Fidelity taxable account was 2.41 through last December. The standard deviation over past 3 years for the iShares Core U.S. Aggregate Bond ETF (AGG) was 2.91% which produced annual average total returns of 3.99%, 3% and 3.65% over the past 3, 5, and 10 years respectively.
Standard Deviation and Risk
I estimate that the bond allocation has a weighted average rating of AA- (possibly A+). The CDs are FDIC insured from solid banks and are unrated by any credit agency which is the norm. For internal purposes, I assign them a AAA rating.
I sold a large number of intermediate corporate bonds last year and a number of bonds were redeemed early by the issuer. As I mentioned in a recent comment, it took 17 snapshots to capture the fixed income portion of this account. The number of snapshots would probably have been close to 30 before I started to pare my investment grade bond portfolio and net redemptions from corporate issuers during the year.
The weighting of the bond portfolio is in short maturities with the average weighted average maturity less than the Barclay's Aggregate U.S. Bond Index:
The long term bond allocation is almost entirely in high quality Tennessee Municipal bonds.
I am increasing the risk in my smallest account which is a Fidelity Roth IRA. That account was almost entirely in short term corporate bonds last year. As those bonds mature, and lacking suitable yield investment in similar securities, I am turning toward small ball trading of high yielding common stocks. The general goal is to earn a total return in excess of the dividend yield. I am selling and buying small lots using the small ball trading rules.
I own Tennessee Municipal bonds in 3 taxable accounts.
These are the municipal bonds that I currently own in my Fidelity account (all of the following snapshots taken on 1/11/2020):
Chattanooga Electric: AA+ (Fitch), AA (S & P)
City of Knoxville Electric: Aa2 (Moody's); AA (S& P)
Dickson County GO: AA (S & P)
Maury County GO: Aa2 (Moody's)
Memphis GO: AA (S &P); Aa2 (Moody's)
Nashville/Davidson County GO: AA (S&P) Aa2 (Moodys)
Shelby County-Methodist Le Bonheur Healthcare: A1 (Moody's); AA- (S & P)
Sullivan County GO: Aa2 (Moody's)
The standard deviation for my Schwab account is currently at 1.45:
The Tennessee municipals have a lower weighting in my Schwab account than the U.S. treasuries and consist of the following:
The Vanguard taxable accounts has no individual common stocks and a common stock fund weighting of less than 1%.
I did not look at the weightings in my IB account which has the highest weightings in preferred stocks, high quality short term corporate bonds and REITs. I did increase my preferred stock weighting in that account during 2019 through purchases of Canadian reset equity preferred stocks.
All four taxable brokerage accounts were up yesterday with the S & P 500 declining .29%.
Overall my CD weightings are declining now since I am not reinvesting the proceeds into CDs given the decline in rates. At Fidelity, I would have to go out to a 2024 maturity to pick up a 2% yield. The highest CD rate is 2.5% and that one matures in 2035.
The lack of yield alternatives is one fuel source for the parabolic stock rise. Another fuel source is spending trillions per year of borrowed money.
+++++++
The Unintended Consequences of Conflicts:
What can go wrong, will go wrong. Murphy's law - Wikipedia
Over the past 50+ years, civilian airplanes have been shot down as unintended consequences of conflicts. In two cases, the parties responsible knew that they were shooting down a passenger jet.
During the war between Iraq and Iran, the U.S. mistakenly shot down Iran Air Flight 655 killing all 290 people aboard. The U.S. acknowledged responsibility and paid almost $62M in compensation to the families. The U.S. denied "liability" for the reasons discussed in the previous link.
Iran initially claimed that it did not shoot down the Ukrainian passenger jet. Tehran official says reports that missiles downed Ukrainian flight 'a big lie'
The Unintended Consequences of Conflicts:
What can go wrong, will go wrong. Murphy's law - Wikipedia
Over the past 50+ years, civilian airplanes have been shot down as unintended consequences of conflicts. In two cases, the parties responsible knew that they were shooting down a passenger jet.
During the war between Iraq and Iran, the U.S. mistakenly shot down Iran Air Flight 655 killing all 290 people aboard. The U.S. acknowledged responsibility and paid almost $62M in compensation to the families. The U.S. denied "liability" for the reasons discussed in the previous link.
Iran initially claimed that it did not shoot down the Ukrainian passenger jet. Tehran official says reports that missiles downed Ukrainian flight 'a big lie'
Iran has now admitted that it "unintentionally" shot the plane down with missiles. Iran Says It Unintentionally Shot Down Ukrainian Airliner
I would characterize Iran's act as negligent homicide based on what is known now.
This tragedy would probably not have happened without the U.S. first deciding to kill an Iranian Major General Qasem Soleimani that set off a train of events that culminated in Iran negligently shooting down a passenger jet.
The attack on the Ukrainian passenger jet came just hours after Iran launched missiles aimed at two Iraqi bases housing U.S. troops in retaliation.
{Will there be 1 republican who will admit that that the chain of events started with the U.S. killing Soleimani? Maybe there is one somewhere. The chain of events does not excuse Iran's negligence of course. Civilians will die when nations clash militarily even when there is no intention to cause them harm.}
I will not be holding my breath waiting for Russia taking responsibility for the negligent homicide of 298 persons aboard Malaysia Airlines Flight 17.
After being confronted with overwhelming evidence that a Russian pilot shot down Korean Air Lines Flight 007, murdering 269 people, Russia admitted that he shot down the flight and then paid the pilot 200 rubles. The pilot knew that it was a passenger jet. Ex-Soviet Pilot on Shooting Down KAL 007-The New York Times Russia did not pay compensation to the families and did not apologize. The airline paid a settlement to some families after being sued in a U.S. federal court. (see The Downing of Korean Air Lines Flight 007: Yale Journal of International Law). I would describe this massacre of innocent civilians as first decree murder.
Libyan Arab Airlines Flight 114 - Wikipedia Israel shot down a passenger jet on a regularly scheduled flight in February 1973 that had accidentally entered airspace over the Sinai Peninsula which was then occupied by Israel.
Civilian Planes Shot Down: A Grim History - The New York Times
++
Russian warship 'aggressively approached' US destroyer in Arabian Sea
++
Trump:
Iraqi prime minister tells U.S. to prepare a troop withdrawal plan - MarketWatch Donald refused to discuss withdrawal. Trump administration refuses to heed Iraq’s call for troop withdrawal - The Washington Post
Iraq's request for a U.S. troop withdrawal is directly linked to Donald's killing of the Iranian Major General Qasem Soleimani on Iraqi soil. It would be politically disadvantageous for Donald to withdraw troops for the reason linked by the Iraqis.
Trump's evolving account of Soleimani's 'imminent threat' Trump is 100% untrustworthy. Soleimani may have been planning some nefarious deed against the U.S., but Donald's representations on this issue are worthless as proof. The same would go for Pompeo. That observation has nothing to do with political beliefs but entirely on fact based observations of their integrity.
FactChecking Trump's Iran Address-FactCheck.org Donald used this opportunity to pander to the republican base. The most memorable part of the speech was his lengthy attacks on prior U.S. administrations while claiming that Don the Magnificent was going to solve all of the problems. Parts of this address sounded like a campaign speech. Eight days after this speech, Donald started to claim at a campaign rally that Soleimani was planning to blow up 4 U.S. embassies. Trump now claims four embassies were under threat from Iran, raising fresh questions about intelligence reports - The Washington Post Donald lies all of the time about everything.
GOP support for constraining Trump on Iran fades in wake of Soleimani killing
I would characterize Iran's act as negligent homicide based on what is known now.
This tragedy would probably not have happened without the U.S. first deciding to kill an Iranian Major General Qasem Soleimani that set off a train of events that culminated in Iran negligently shooting down a passenger jet.
The attack on the Ukrainian passenger jet came just hours after Iran launched missiles aimed at two Iraqi bases housing U.S. troops in retaliation.
{Will there be 1 republican who will admit that that the chain of events started with the U.S. killing Soleimani? Maybe there is one somewhere. The chain of events does not excuse Iran's negligence of course. Civilians will die when nations clash militarily even when there is no intention to cause them harm.}
I will not be holding my breath waiting for Russia taking responsibility for the negligent homicide of 298 persons aboard Malaysia Airlines Flight 17.
After being confronted with overwhelming evidence that a Russian pilot shot down Korean Air Lines Flight 007, murdering 269 people, Russia admitted that he shot down the flight and then paid the pilot 200 rubles. The pilot knew that it was a passenger jet. Ex-Soviet Pilot on Shooting Down KAL 007-The New York Times Russia did not pay compensation to the families and did not apologize. The airline paid a settlement to some families after being sued in a U.S. federal court. (see The Downing of Korean Air Lines Flight 007: Yale Journal of International Law). I would describe this massacre of innocent civilians as first decree murder.
Libyan Arab Airlines Flight 114 - Wikipedia Israel shot down a passenger jet on a regularly scheduled flight in February 1973 that had accidentally entered airspace over the Sinai Peninsula which was then occupied by Israel.
Civilian Planes Shot Down: A Grim History - The New York Times
++
Russian warship 'aggressively approached' US destroyer in Arabian Sea
++
Trump:
Iraqi prime minister tells U.S. to prepare a troop withdrawal plan - MarketWatch Donald refused to discuss withdrawal. Trump administration refuses to heed Iraq’s call for troop withdrawal - The Washington Post
Iraq's request for a U.S. troop withdrawal is directly linked to Donald's killing of the Iranian Major General Qasem Soleimani on Iraqi soil. It would be politically disadvantageous for Donald to withdraw troops for the reason linked by the Iraqis.
Trump's evolving account of Soleimani's 'imminent threat' Trump is 100% untrustworthy. Soleimani may have been planning some nefarious deed against the U.S., but Donald's representations on this issue are worthless as proof. The same would go for Pompeo. That observation has nothing to do with political beliefs but entirely on fact based observations of their integrity.
FactChecking Trump's Iran Address-FactCheck.org Donald used this opportunity to pander to the republican base. The most memorable part of the speech was his lengthy attacks on prior U.S. administrations while claiming that Don the Magnificent was going to solve all of the problems. Parts of this address sounded like a campaign speech. Eight days after this speech, Donald started to claim at a campaign rally that Soleimani was planning to blow up 4 U.S. embassies. Trump now claims four embassies were under threat from Iran, raising fresh questions about intelligence reports - The Washington Post Donald lies all of the time about everything.
GOP support for constraining Trump on Iran fades in wake of Soleimani killing
Fort Bragg's 82nd Airborne deploys to the Middle East
'Insulting and demeaning': Lawmakers from Both Parties rip Trump administration after Iran briefing
++
'Insulting and demeaning': Lawmakers from Both Parties rip Trump administration after Iran briefing
++
The Trump and his Trumpsters are out in force claiming that the Democrats love terrorists.
I referenced a statement made by Nikki Haley in my last post, where she asserted that the only people mourning the death of Soleimani were Democrats.
The republican minority Chairmen of the House Judiciary Committee claimed that the democrats loved terrorists. GOP Rep. Doug Collins makes unfounded claim that Democrats are 'in love with terrorists'
Republican House Leader Blames Adam Schiff for Trump's Ordering of Soleimani Strike
Demagogue Don, our Great and Dear Leader, claimed earlier today that Democrats were defending the life of Soleimani:
I referenced a statement made by Nikki Haley in my last post, where she asserted that the only people mourning the death of Soleimani were Democrats.
The republican minority Chairmen of the House Judiciary Committee claimed that the democrats loved terrorists. GOP Rep. Doug Collins makes unfounded claim that Democrats are 'in love with terrorists'
Republican House Leader Blames Adam Schiff for Trump's Ordering of Soleimani Strike
Demagogue Don, our Great and Dear Leader, claimed earlier today that Democrats were defending the life of Soleimani:
The Trumpster congressman Paul Gosar (R-AZ) tweeted a fake photo of Obama shaking the hand of Iran's President Hassan Rouhani. The real photo has Obama shaking the hand of the Indian P.M. Manmohan Singh. GOP congressman tweets fake photo of Obama with Iran's president Gosar's six siblings opposed his reelection bid. Six siblings of GOP congressman endorse his opponent in viral campaign ad - CBS News Gosar represents a solidly republican rural district in Arizona that is about 89% white. He will win reelection comfortably notwithstanding his frequent outrageous acts and comments.
+++++
All trades are commission free unless otherwise noted.
1. Small Ball Adds, Pares and Eliminations:
A. Added 25 EAF at $11.27:
Quote: GrafTech International Ltd.
EAF | GrafTech International Ltd. Analyst Estimates
2018 Annual Report
Last Discussed: Stocks, Bonds & Politics:Item # 1.B. Bought 25 EAF at $11.72 (12/18/19 Post)
Last Sell Discussion: Item #3.C. Sold 25 at $14.48 (12/1819 Post)(profit snapshot = $125.38); Item # 2.A. Sold 110 EAF at $13.48 (11/20/19 Post)(profit snapshot +$61.69).
Dividend: Quarterly at $.085 per share ($.34 annually)
Last Ex Dividend: 11/27/19
Yield at Cost = 2.96%
Current Position: 50 Shares
Average Total Cost Per Share = $11.49
Maximum Position: 150 shares
Purchase Restriction: Small Ball Rule using 25 share lots
Small Ball Rules
Last Earnings Report: GrafTech Reports Third Quarter 2019 Results
A. Added 25 EAF at $11.27:
Quote: GrafTech International Ltd.
EAF | GrafTech International Ltd. Analyst Estimates
2018 Annual Report
Last Discussed: Stocks, Bonds & Politics:Item # 1.B. Bought 25 EAF at $11.72 (12/18/19 Post)
Last Sell Discussion: Item #3.C. Sold 25 at $14.48 (12/1819 Post)(profit snapshot = $125.38); Item # 2.A. Sold 110 EAF at $13.48 (11/20/19 Post)(profit snapshot +$61.69).
Dividend: Quarterly at $.085 per share ($.34 annually)
Last Ex Dividend: 11/27/19
Yield at Cost = 2.96%
Current Position: 50 Shares
Average Total Cost Per Share = $11.49
Maximum Position: 150 shares
Purchase Restriction: Small Ball Rule using 25 share lots
Small Ball Rules
Last Earnings Report: GrafTech Reports Third Quarter 2019 Results
I discussed the last earnings report in Item 2.A.
B. Added 10 TEF at $6.97:
Quote: TEF | Telefonica S.A. ADR Overview | MarketWatch
Last Discussed: Item # 1.A. Added 50 TEF at $7.15 (12/28/19)
I have nothing to add to my recent discussions.
Last Discussed: Item # 1.A. Added 50 TEF at $7.15 (12/28/19)
I have nothing to add to my recent discussions.
Current Position: 110 shares
Maximum Position: 150 shares
Purchase Restriction: Small Ball Rule
Average Cost Per Share = $7.22
I owned 50 shares on the last ex dividend date and received that dividend on 1/6/20:
Telefonica is domiciled in Spain. The tax treaty between the U.S. and Spain limits the withholding rate to 15% for U.S. citizens. US Senate ratifies Spain-US tax treaty protocol - EY - Global The withholding rate for my dividend was at 19% (.19% x $11.11 = $2.11) indicating that Fidelity did not claim my tax treaty rights as a U.S. citizen.
I owned 50 shares on the last ex dividend date and received that dividend on 1/6/20:
Telefonica is domiciled in Spain. The tax treaty between the U.S. and Spain limits the withholding rate to 15% for U.S. citizens. US Senate ratifies Spain-US tax treaty protocol - EY - Global The withholding rate for my dividend was at 19% (.19% x $11.11 = $2.11) indicating that Fidelity did not claim my tax treaty rights as a U.S. citizen.
C. Eliminated PFF-Sold 10 shares at $37.57:
Profit Snapshot: +$7.24
Sponsor's Website: iShares Preferred and Income Securities ETF | PFF
Expense Ratio: .46% viewed as high
Dividend: Monthly at a variable rate
Last Ex Dividend: 12/19/19
I prefer to own individual preferred stocks.
D. Added 10 SKT at $14.08:
Quote: Tanger Factory Outlet Centers Inc. (SKT)
As of 9/30/19, Tanger had "32 consolidated outlet centers in 19 states totaling 12.0 million square feet. We also had 7 unconsolidated outlet centers in 6 states or provinces totaling 2.2 million square feet. During March 2019, we closed on the sale of four non-core consolidated outlet centers for total gross proceeds of $130.5 million, and total net proceeds of approximately $128.2 million. The four properties were located in Nags Head, North Carolina; Ocean City, Maryland; Park City, Utah; and Williamsburg, Iowa and represented 6.8% of the Company’s consolidated portfolio square footage." Page 42 10-Q for the Q/E 9/30/19 The list of properties starts at page 43.
Last Buy Discussions: Item # 1.D. Added 10 at $14.6 and 10 at $14.29 (9/4/19 Post)
I also own 50 shares in my IB account where I will not buy more shares and will not reinvest the dividend. Item # 3.A. Bought 50 SKT at $14.44 (10/23/19 Post)
Last Sell Discussion: Item # 1.A. Sold 50 SKT at $16.85 (9/28/19 Post)(profit snapshot = $38.48)
10 Year Chart: Major Bear Market since mid-2016 (characterized by me as a widow maker chart)
Dividend: Quarterly at $.3555 per share ($1.42 annually)
Next Ex Dividend Date: 1/30/20
Dividend Reinvestment: Yes for the position held in this account
Current Position in this Account: 40+ Shares (I own 50 shares in another account where I will not reinvest the dividends or buy more shares: )
Current Average Cost: $14.59
This 10 share purchase reduced the average cost per share from $14.76 to $14.59.
Dividend Yield at average cost = 9.73 %
Maximum Position in This Account: 100 shares
Purchase Restriction: Small Ball Rule
Last Earnings Report (Q/E 9/30/19): Tanger Reports Third Quarter Results
Occupancy Rate = 95.9%
Expects to generate "nearly $95 million of free cash flow over and above" the 2019 dividend payments
Same store operating income decreased 1.8% "due primarily to the impact of tenant bankruptcies, lease modifications and store closures" The reasonable future forecast is a continuation of those problems as the dominant trend, though the negative impact will likely be lumpy IMO.
Weighted Average Interest Cost = 3.5%
As previously discussed many times, the straight line rent adjustment removes from FFO non-cash revenues created by the accounting profession. Pretend money is not available to support the dividend. Still, even with all of SKT's problems, the FAD payout ratio is comfortable at 76%.
With retail bankruptcies occurring frequently, it is not surprising that FFO per share declined some Y-O-Y.
Selling 4 outlet centers in May 2019 was a major reason for the Y-O-Y declines in FAD and FFO: "In March 2019, we sold four outlet centers for net proceeds of approximately $128.2 million, which resulted in a gain on sale of assets of $43.4 million. The proceeds from the sale of these unencumbered assets were used to pay down balances outstanding under our unsecured lines of credit."
In its earnings press release, SKT represented that those dispositions resulted in a $.04 per share dilutive impact to 2019 third quarter FFO.
Adjusting for that item, I increased the reported FFO per share of $.58 to $.62 which compares more favorably with the $.63 per share number from the 2018 third quarter.
SEC Filings
2018 Annual Report
10-Q for the Q/E 9/30/19 (debt discussed starting at page 22)
E. Sold 10 NRZ at $16.21:
Quote: New Residential Investment Corp. (NRZ)
Website: New Residential Investment Corp.
SEC Filings
2018 Annual Report (risk summary starts at page 13 and ends at page 56)
Last Buy Discussion: Item # 1.C. Bought 10 NRZ at $13.95 (9/4/19 Post)
Dividend: Quarterly at $.50 per share
Last Ex Dividend: 12/30/19 (after pare)
New Residential Investment Corp. Declares Fourth Quarter 2019 Common and Preferred Stock Dividends
Dividend Reinvestment: Yes
Dividend Yield at $15 Total Cost per share = 13.33%
There is a risk of a dividend cut for the reasons discussed below
Position Before Pare: Average Cost per share = $15.17
Position After Pare: Average Cost per share = $15
Profit Snapshot: $1.54
Generally, I view it to be a victory when I sell a high dividend stock like NRZ in excess of the unadjusted for ROC cost basis. I thought that was the case with this 10 share pare when I entered the sell order. I forgot to check the original cost basis which was $16.38. Item # 1.A. Bought 10 NRZ at $16.38 (3/15/18 Post) The tax cost basis had been reduced by ROC. This is just a mistake in my strict small trading rules.
The next highest cost lot was bought at $16.18 on 2/28/18 (shown as having a $15.87 cost basis in the previous snapshot)
NRZ Interactive Chart: Relatively narrow channel
Last Earnings Report (Q/E 9/30/19):
On the surface, this report looks okay. NRZ reported $.54 per share in net income and paid out its regular quarterly dividend of $.5 per share.
The dividend is being covered by the sale of securities and the gain "on settlement of securities":
In the last quarter, those two items contributed $255.293M. Of the $224.584M in GAAP net income reported for the quarter, the gain on the sale of mortgage loans was $100.541, which is not a recurring source of income. The gain from the year ago quarter was $45.732M.
SEC Filed Press Release
New Residential Investment's (NRZ) CEO Michael Nierenberg on Q3 2019 Results - Earnings Call Transcript | Seeking Alpha
The stock recently received a small boost when Argus initiated coverage with a buy rating and an $18 PT (12/30/19 report, available to Charles Schwab customers).
The only other brokerage report that I can access is from Credit Suisse which has a market perform rating and a $17.5 PT (10/30/19 report, available to Charles Schwab customers)
F. Pared FBIO-Sold 100 at $2.7:
Quote: Fortress Biotech Inc. (FBIO)
Profit Snapshot: net of $38.49
Category: Lottery Ticket Basket-Extreme Risk
In this pare, I sold my lowest and highest cost 50 share lots.
Fortress Biotech - Specializing in Acquiring, Developing and Commercializing Novel Pharmaceutical and Biotechnology Products
Pipeline
Marketed Products
Fortress Biotech Reports Third Quarter 2019 Financial Results and Recent Corporate Highlights
SEC Filings
10-Q for the Q/E 9/30/19
Prior Round-Trip: Item # 5.A. Sold 50 FBIO at $4.96 (3/19/18 Post)(profit snapshot = $20.29)
D. Added 10 SKT at $14.08:
Quote: Tanger Factory Outlet Centers Inc. (SKT)
As of 9/30/19, Tanger had "32 consolidated outlet centers in 19 states totaling 12.0 million square feet. We also had 7 unconsolidated outlet centers in 6 states or provinces totaling 2.2 million square feet. During March 2019, we closed on the sale of four non-core consolidated outlet centers for total gross proceeds of $130.5 million, and total net proceeds of approximately $128.2 million. The four properties were located in Nags Head, North Carolina; Ocean City, Maryland; Park City, Utah; and Williamsburg, Iowa and represented 6.8% of the Company’s consolidated portfolio square footage." Page 42 10-Q for the Q/E 9/30/19 The list of properties starts at page 43.
Last Buy Discussions: Item # 1.D. Added 10 at $14.6 and 10 at $14.29 (9/4/19 Post)
I also own 50 shares in my IB account where I will not buy more shares and will not reinvest the dividend. Item # 3.A. Bought 50 SKT at $14.44 (10/23/19 Post)
Last Sell Discussion: Item # 1.A. Sold 50 SKT at $16.85 (9/28/19 Post)(profit snapshot = $38.48)
10 Year Chart: Major Bear Market since mid-2016 (characterized by me as a widow maker chart)
 |
| As of 1/2/2020 |
Next Ex Dividend Date: 1/30/20
Dividend Reinvestment: Yes for the position held in this account
Current Position in this Account: 40+ Shares (I own 50 shares in another account where I will not reinvest the dividends or buy more shares: )
Current Average Cost: $14.59
 |
| Snapshot Intra-day 1/2/2020 |
Dividend Yield at average cost = 9.73 %
Maximum Position in This Account: 100 shares
Purchase Restriction: Small Ball Rule
Last Earnings Report (Q/E 9/30/19): Tanger Reports Third Quarter Results
Occupancy Rate = 95.9%
Expects to generate "nearly $95 million of free cash flow over and above" the 2019 dividend payments
Same store operating income decreased 1.8% "due primarily to the impact of tenant bankruptcies, lease modifications and store closures" The reasonable future forecast is a continuation of those problems as the dominant trend, though the negative impact will likely be lumpy IMO.
Weighted Average Interest Cost = 3.5%
 |
| Adjustments to FFO to Arrive at FAD (Funds Available for Distribution) |
With retail bankruptcies occurring frequently, it is not surprising that FFO per share declined some Y-O-Y.
Selling 4 outlet centers in May 2019 was a major reason for the Y-O-Y declines in FAD and FFO: "In March 2019, we sold four outlet centers for net proceeds of approximately $128.2 million, which resulted in a gain on sale of assets of $43.4 million. The proceeds from the sale of these unencumbered assets were used to pay down balances outstanding under our unsecured lines of credit."
In its earnings press release, SKT represented that those dispositions resulted in a $.04 per share dilutive impact to 2019 third quarter FFO.
Adjusting for that item, I increased the reported FFO per share of $.58 to $.62 which compares more favorably with the $.63 per share number from the 2018 third quarter.
SEC Filings
2018 Annual Report
10-Q for the Q/E 9/30/19 (debt discussed starting at page 22)
E. Sold 10 NRZ at $16.21:
Quote: New Residential Investment Corp. (NRZ)
Website: New Residential Investment Corp.
SEC Filings
2018 Annual Report (risk summary starts at page 13 and ends at page 56)
Last Buy Discussion: Item # 1.C. Bought 10 NRZ at $13.95 (9/4/19 Post)
Dividend: Quarterly at $.50 per share
Last Ex Dividend: 12/30/19 (after pare)
New Residential Investment Corp. Declares Fourth Quarter 2019 Common and Preferred Stock Dividends
Dividend Reinvestment: Yes
Dividend Yield at $15 Total Cost per share = 13.33%
There is a risk of a dividend cut for the reasons discussed below
Position Before Pare: Average Cost per share = $15.17
Position After Pare: Average Cost per share = $15
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| Snapshot 12/2/20 |
The next highest cost lot was bought at $16.18 on 2/28/18 (shown as having a $15.87 cost basis in the previous snapshot)
NRZ Interactive Chart: Relatively narrow channel
Last Earnings Report (Q/E 9/30/19):
On the surface, this report looks okay. NRZ reported $.54 per share in net income and paid out its regular quarterly dividend of $.5 per share.
In the last quarter, those two items contributed $255.293M. Of the $224.584M in GAAP net income reported for the quarter, the gain on the sale of mortgage loans was $100.541, which is not a recurring source of income. The gain from the year ago quarter was $45.732M.
SEC Filed Press Release
New Residential Investment's (NRZ) CEO Michael Nierenberg on Q3 2019 Results - Earnings Call Transcript | Seeking Alpha
The stock recently received a small boost when Argus initiated coverage with a buy rating and an $18 PT (12/30/19 report, available to Charles Schwab customers).
The only other brokerage report that I can access is from Credit Suisse which has a market perform rating and a $17.5 PT (10/30/19 report, available to Charles Schwab customers)
F. Pared FBIO-Sold 100 at $2.7:
Quote: Fortress Biotech Inc. (FBIO)
Profit Snapshot: net of $38.49
Category: Lottery Ticket Basket-Extreme Risk
In this pare, I sold my lowest and highest cost 50 share lots.
Fortress Biotech - Specializing in Acquiring, Developing and Commercializing Novel Pharmaceutical and Biotechnology Products
Pipeline
Marketed Products
Fortress Biotech Reports Third Quarter 2019 Financial Results and Recent Corporate Highlights
SEC Filings
10-Q for the Q/E 9/30/19
Prior Round-Trip: Item # 5.A. Sold 50 FBIO at $4.96 (3/19/18 Post)(profit snapshot = $20.29)
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 sell 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 family members.
