Economy:
Economists fear a "double dip" recession is coming soon - CBS News; Without a fiscal package we will fall into a double-dip recession: Moody's Zandi
Congress stalled on stimulus talks as millions face a 'benefits cliff'
ADP says hiring slows again in November as private sector adds 307,000 jobs - MarketWatch The forecast was for +440K.
The 245,000 new jobs added last month is smallest since U.S. recovery began in May - MarketWatch The forecast was for +432K. There was a 100,000 decline in government jobs. State and local governments are having to cut back. Jobs report November 2020: Employment growth slows amid Covid surge
Republicans ready to become deficit hawks again under a President Biden | TheHill The senate republicans will salt the earth when Biden becomes President, as they did during the last 2 years of Obama's administration when they last became deficit hawks. Party divisions of United States Congresses The republicans controlled the House for the last 6 years of Obama's presidency. Pay attention to what republican politicians actually do over time rather than what they say. Their hypocrisy has no boundary.
U.S. growth is substantially dependent now on the U.S. government spending massive amounts of borrowed money.
Debt on 1/19/17: $19.849+Trillion (day before Trump's inauguration)
Debt on 11/30 /20: $27.446 +Trillion
38.27% increase in less than 4 years
Debt to the Penny | Fiscal Data | U.S. Treasury
In the fiscal year ending 9/30/19, with no pandemic related spending, the U.S. budget deficit soared to $984B or 4.6% of GDP. How worried should you be about the federal deficit and debt? Spending that much borrowed money will have a significant positive impact on GDP growth.
The budget deficit for the F/Y ending 9/30/20 would have exceeded $1 trillion without the pandemic related spending.
Growth is being financed by spending borrowed money that is accelerating at a parabolic rate.
Black Friday traffic in stores craters 52% during pandemic
Powell has made it crystal clear that he opposed Mnuchin's salt the earth strategy in preparation for Biden's administration. Powell stresses importance of lending programs, calls economic outlook 'extraordinarily uncertain'
China's economy is improving rapidly. China services-sector activity sped up in November - MarketWatch
November light vehicle sales decreased to a seasonally adjusted annual rate ("SAAR") of 15.55 million, down 4.5% from October and -8.4% Y-O-Y. The consensus was for 16.2M SAAR. Apparently, the recent surge in Covid cases is causing this downtrend in sales. United States New Vehicle Sales: Autos and light trucks | Moody's Analytics; Light Weight Vehicle Sales: Autos and Light Trucks-St. Louis Fed
ISM Services PMI™ at 55.9%-November 2020 (down from 56.6 in October; new orders at 57.2, down from 58.8; numbers above 50 indicate expansion)
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Markets and Market Commentary:
S & P 500 P/E Ratios as of 12/4/20:
GAAP TTM 12 months: 41.65
Non-GAAP Estimated Forward 12 months: 25.97
Dividend Yield: 1.65%
Sourced: P/E & Yields
Shiller PE Ratio: 33.79
Market Cap to GDP Ratio - The Buffett Indicator
Crestmont Market Valuation Update: November 2020 - dshort - Advisor Perspectives ("Based on the November S&P 500 average of daily closes, the Crestmont P/E is 155% above its arithmetic mean and at the 100th percentile of this fourteen-plus-decade monthly metric.")
Why the 2020s could favor market-timers over buy-and-hold U.S. stock investors - MarketWatch
Sky-high stock prices make sense, Robert Shiller says-MarketWatch I discussed this article in a 2/1/2020 comment.
Investors are overlooking this one thing, major bank says as it sets 4,000 target on S&P 500 - MarketWatch Barclays set a S & P 500 4,000 PT by 12/31/2021.
JPMorgan says emerging markets are 'under owned,' stocks could rally as much as 20%
Value Stock Rally Buoys Dividend Payers’ Returns | Barron's (subscription publication) I own 6 of the 10 stocks listed in that article, though they are small ball type positions. Four of those stocks, KEY, PRU, T and USB, have been discussed recently.
Analysts predict further weakness for U.S. dollar next year I own CADs and AUDs in my IB account.
AUD / USD Currency Chart. Australian Dollar to US Dollar Rates
CAD / USD Currency Chart. Canadian Dollar to US Dollar Rates
Canadian Dollar Hits Highest Since 2018 After Strong Jobs Data
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Trump:
Trump Election Fraud Allegations Disgraceful Endgame to 2020 Reelection Effort | National Review The National Review is the most well known conservative magazine.
PolitiFact | 46 minutes of falsehoods: Trump rehashes baseless election claims in White House video
Trump escalates baseless attacks on election with 46-minute video rant - The Washington Post (12/2/20)
The most petulant 46 minutes in American history - The Washington Post
Trump's 'Most Important' Speech Was Mostly False - FactCheck.org
PolitiFact | Fact-checking Trump’s whopper-laden interview with Maria Bartiromo
Judges turn back claims by Trump and his allies in six states as the president’s legal effort founders - The Washington Post The judges are fining no credible evidence of fraud.
"On Friday, the GOP speaker of the Arizona House firmly rejected calls from Trump’s campaign for the legislature to disregard the popular vote and declare Trump the winner of the state’s 11 electoral votes." There is still some push back within the GOP to its now dominant anti-democracy tendencies.
The GOP's Wisconsin Anti-Democracy Push:
Trump's campaign paid a $3M fee for recounts in Milwaukee and Dane Counties, the two most populous counties in Wisconsin won by Biden. Biden Gained 132 Votes In Recount Of Milwaukee County Requested By Trump: NPR; Recount Page | Wisconsin Elections Commission
In Dane County, the recount finished with Trump gaining 45 votes. Overall, for his campaign's $3M dollars, Trump managed to increase Biden votes by 87. Dane County recount shows Biden won Wisconsin as Trump prepares a lawsuit Trump's in effect campaign paid $34,382 for each Biden vote ($3M divided by 87 net Biden vote gain)
Recounts simply do not provide any meaningful change in the vote counts. If Biden had won, Wisconsin by less than 500 votes, a recount would make sense but only if Wisconsin would by itself swing the election to Demagogue Don.
Trump wants to throw out ballots from 238,000 Wisconsin voters This is to be expected from the anti-democracy party. The voters followed the rules established by the Wisconsin republicans.
Trump also promoted the same form of early voting to his followers but only seeks to throw out those who followed the rules in Milwaukee and Dane Counties. Early voting begins on Tuesday in Wisconsin! - YouTube Trumps lawyer who is leading the fight to cancel 238K lawfully cast ballots under existing Wisconsin law would have his own ballot canceled if successful. Attorney heading up Trump recount wants to throw out his own vote
Trump and Pence sue to reverse Biden win in Wisconsin (12/1/2020) This suit seeks to cancel 221,000 ballots cast in Milwaukee and Dane counties. Don the Authoritarian filed the suit directly with the republican controlled Wisconsin Supreme Court bypassing the lower courts.
The lawsuit does not claim that there was a single fraudulent vote cast in Wisconsin, nor is there any claim that even 1 voter acted improperly.
The republicans want most of the 221K ballots tossed due to what the republicans now view as an incorrect form used for several election cycles by election commissions throughout the state to request an absentee ballot.
It is noteworthy that the GOP found fault with the ballot application form only after Donald lost Wisconsin and only then decided to challenge its use.
The anti-democracy party does not like long standing voting procedures and rules-when it loses-so it asked the republicans on the Wisconsin Supreme Court to change the rules that voters followed after the votes were cast and apply the newly created judicial rules retroactively, thereby canceling 221,000 vote only in the two large population counties that Biden won.
The anti-democracy party does not want to apply the same new rules to counties that Trump carried in Wisconsin. In Trump's America, those republican county votes are lawful since they voted the right way.
I would add that the same rule were in place when Trump won in 2016 and he did not complain then; and the system was created by republicans who "have long encouraged their supporters to vote in-person early without questioning the legitimacy of the practice." Wisconsin Supreme Court rejects President Trump's election lawsuit Hypocrisy knows no limits in the anti-democracy party.
In a 4 to 3 decision, with 1 of the 4 republican judges siding with the 3 democrats, the Wisconsin Supreme Court refused to accept jurisdiction over the case.
The anti-democracy party can refile the lawsuit in Wisconsin's state circuit court.
I suspect that at least two of the republican Justices would have upheld democracy by canceling the votes and allowing their colleagues in the state legislature to appoint Wisconsin's electors. One of them stated that refusing to consider the case requesting the cancellation of over 200K votes was a "death blow" to democracy. Wisconsin Elects A Supreme Court Justice Who Once Mocked ‘Queers’ Who Get AIDS
The anti-democracy party then filed on Thursday a lawsuit in federal district court requesting a judge to throw out the election results and put the republican legislature in charge of selecting the electors. Trump files federal court challenge to Wisconsin election outcome The case was filed in the eastern district of Wisconsin and was assigned to the Trump appointed judge Brett Ludwig.
It needs to be remembered for as long as you live that over 74M people voted for a lying, authoritarian, sociopathic demagogue, qualities that were clearly and easily observable over a 4 year period. That is a clear and ominous warning for the future. The struggle will be a long one and the outcome is uncertain.
{as of 12/3/2020, Donald's vote total has increased to 74,122,580 as more mail in ballots are counted. Biden was then at 81,029,063. The margin of victory was then at 6,906,483. Donald claims that Biden has to prove that all of those votes are lawful before he can be sworn in as President. That burden, created by the anti-democracy party, does not apply when a republican wins}.
Close to 80% of republicans have concluded that Biden won by fraud even though no evidence, admissible in a court, has been produced establishing more than 1 or 2 fraudulent votes. More Americans Happy About Trump Loss Than Biden Win | Monmouth University Polling Institute ("Three-quarters (77%) of Trump backers say Biden’s win was due to fraud."); President Trump and his voters agree on not accepting the election results – for now | YouGov ("Four in five of the President’s supporters believe fraud changed the outcome nationally.")
I previously referred to a registered republican being criminally charged after voting for his deceased mother. That is a felony charge. Chalk that one up to an illegal Trump vote. Thin Allegations of 'Dead People' Voting - FactCheck.org So where is the proof? That is an irrelevant question in Trump's America. Just make stuff up.
The GOP's Anti-Democracy Push in Pennsylvania:
In a unanimous opinion, Pennsylvania's Supreme Court dismissed with prejudice (a final decision on the merits) another republican filed case that sought to cancel all mail-in ballots legally cast under PA law. Pennsylvania Supreme Court dismisses another election case brought by Republicans; Pennsylvania Supreme Court dismisses lawsuit against mail ballots with prejudice in another defeat for Trump - The Washington Post; republished at MSN:Pennsylvania Supreme Court dismisses lawsuit against mail ballots with prejudice in another defeat for Trump
The loser just keeps on losing.
Another group of republicans, led by Congressman Mike Kelly (R-PA) wants the republican dominated U.S. Supreme Court to cancel all mail in ballots cast in that state. Supreme Court asked to block Pennsylvania Biden win over Trump; Rep. Mike Kelly (R) and Sean Parnell Appeal Pa. Supreme Court Loss Over Mail-In Ballots To SCOTUS – CBS Pittsburgh (Parnell lost a congressional election to Connor Lamb) The republicans claim that a law passed by the republican state legislature, which allows people to vote by mail without providing an excuse, violates Pennsylvania's Constitution, a conclusion reached by the republicans after Trump lost PA to Biden.
In TrumpWorld, those republicans are only concerned about upholding the PA constitution and voting rights; and it just so happens that their remedy for the claimed unlawful votes will result in tossing mail-in ballots that led to Biden's win and Mr. Parnell's loss.
Don the Authoritarian and Georgia:
Trump continues to claim that he lost Georgia due to rampant fraud and has virulently attacked the republican Governor and Secretary of State for refusing to certify that Dictator Don, the unchallengeable leader of his party, had won the state.
Despicable Don called the republican Secretary of State of Georgia the "enemy of the people". Brad Raffensperger, Georgia Secretary of State, as 'Enemy of the People' | National Review; Trump calls Raffensperger enemy of people over baseless election claims - Business Insider
Thoroughly Disgusting Don regrets endorsing Brian Kemp, an over the top Trump loyalist, since Kemp did not award him the election but instead certified the vote showing Biden won the state as required by state law. Kemp to Trump: Georgia law blocks him from ‘interfering’ with elections Screw the law, a totally irrelevant consideration in Trump's America. Kemp owed the Teflon Don a favor and it was time to pay up.
Biden will carry Georgia after second recount: secretary of state | Reuters
Fact-checking Trump's baseless claim that signature audits in Georgia would uncover fraud
Republican election officials in Georgia have publicly requested that Donald stop inciting violence against them. Trump inciting violence, warns Georgia election official - BBC News Georgia election official pleads with Trump and Republicans to stop 'inspiring' acts of violence Donald has ignored those pleas.
Trump Misinformation on Georgia Ballot Rejections - FactCheck.org Donald is viewed as honest by 81% of republicans. It may take the WP several months after Donald leaves office to catch up listing his false and misleading statements. The last list contained over 20,000 false and misleading statements through 7/9/20. President Trump has made more than 20,000 false or misleading claims-The Washington Post (7/13/20 article)
Trump allies urge Georgia Republicans to sit out Senate runoffs: USA Today Why bother to vote when the ghost of Hugo Chavez will change the vote for the republican to the democrat? That is one sound argument in TrumpWorld where truth and facts are of course irrelevant.
Georgia Republican Senator David Perdue reportedly flipped shares of anti-malware company dozens of times while serving on Senate’s cybersecurity subcommittee - MarketWatch; 2,596 Trades in One Term: Inside Senator Perdue’s Stock Portfolio - The New York Times
There have now been 3 recounts of Georgia's votes and Biden won all three by about 11.7 K votes. Recount affirms Joe Biden won Georgia Trumpsters have been threatening election officials with death, which is to be expected.
Eleventh Circuit Dismisses Sidney Powell Appeal in Kraken Lawsuit | Law & Crime
Trump's "Dream Team" of Lawyers:
For Trump advocate Sidney Powell, a playbook steeped in conspiracy theories - The Washington Post
Statement From Dominion on Sidney Powell's Charges - Dominion Voting Systems
Fired director of US cyber agency Chris Krebs explains why he says vote was "most secure" in America's History- YouTube; Chris Krebs explains why election was secure - 60 Minutes - CBS News
One of Don the Authoritarian's republican lawyers, Joe DiGenova, stated that Chris Krebs needed to "drawn and quartered" and "Taken out at dawn and shot" Trump campaign lawyer says former cybersecurity chief should be 'shot' - POLITICO DiGenova also called Krebs "a class A moron." DiGenova is part of Trump's "elite strike force" of lawyers.
Rudy Giuliani and Trump discussed pardon after loss to Biden Rudy denies that he talked to Trump about a pardon. I suspect that Rudy would like to have one. Does Rudy Giuliani Want a Pardon From Trump?-The Atlantic; Trump associates, including Giuliani, are asking for pardons
Federal Judge Picks Apart Sidney Powell and Lin Wood's Lawsuit | Law & Crime The filing made by those attorneys was grossly incompetent.
How Is Trump’s Lawyer Jenna Ellis ‘Elite Strike Force’ Material? - The New York Times That article exposes her for what she really is. IMO, she learned a great deal about self-promotion from the Duck.
Pro-Trump Lawyer Lin Wood Attacks Brian Kemp at Georgia Rally
Cobb County responds to second video circulated by Lin Wood - Cobb County Courier
Video Doesn't Show Election Fraud in Georgia - FactCheck.org
The "Fair and Balanced" Conspiracy Theory "news" Network:
Fox "news" Maria Bartiromo is just teeing up Trump to lie to viewers; Fox News' Maria Bartiromo gave Trump his first TV interview since the election. It was filled with lies - CNN; With Fox’s Maria Bartiromo as his first post-election interviewer, Trump found a sympathetic ear and few questions - The Washington Post I would classify that interview as one of the worst ever broadcast on national TV, if not the worst. Bartiromo is just another Trump propagandist at Fox "news" IMO. PolitiFact | Fact-checking Trump’s whopper-laden interview with Maria Bartiromo; The 40 most utterly unhinged lines from Donald Trump's first post-election interview; Maria Bartiromo Reassures Trump on 'Obamagate' Scandal; Trump’s unhinged Fox Business interview with Maria Bartiromo, explained - Vox
DOJ did not find fraud that would reverse Biden win over Trump, Barr says That is a big admission coming from Trump's attorney. A more interesting question is whether the DOJ has uncovered acts of fraud impacting more than 10 ballots nationwide. A Fox "news" anchor claimed that AG Barr had been compromised by the "Deep State". Lou Dobbs accuses Bill Barr of being "compromised" by "the Deep State" Trumpsters will rebut an evidence based conclusion with a manufactured conspiracy theory.
Fox News' Hannity Sets Ratings Record in November Amid Trump's Voter Fraud Push Fox "news" pushes Trump's fact free election fraud claims
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How Democrats Suffered Crushing Down-Ballot Losses Across America - The New York Times; republished at MSN: How Democrats Suffered Crushing Down-Ballot Losses Across America Democrats targeted 12 states with republican controlled state legislatures and came up short everywhere. Consequently, the republicans in those states will be able to gerrymander state and federal congressional districts based on the 2020 census. Part of suburban areas that have been trending toward democrats will be segregated out and joined with heavily republican rural ares for example.
The democrats have a message problem that has allowed republicans to tag them as socialists who want to "defund the police".
Some democrats call themselves "democratic socialists", and some will actually advocate defunding the police.
Those kind of positions and self descriptions provide an opening for republicans to tag all democrats as radical leftists.
Republicans realized a long time ago that words matter when appealing to voters and "defund the police" and "democratic socialist" are some of the most brain dead words that a political party can use today, assuming that the objective is a desire to pass legislation through majority control rather than to throw meatless bones to the most liberal democrats.
In borderline districts that lean republican or are toss ups, the tags worked on a sufficient number of voters to cause democrat losses.
Many of those districts were carried by Biden in reaction to Trump's clown show, as one Democrat called it, but voted for republicans down ballot including for Congress and the state legislative races.
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DOJ investigating potential White House 'bribery-for-pardon' scheme
Justice Department investigating potential presidential pardon bribery scheme, court records reveal
Trump Has Discussed With Advisers Pardons for His 3 Eldest Children and Giuliani - The New York Times; republished at MSN: Trump Has Discussed With Advisers Pardons for His 3 Eldest Children and Giuliani
Trump threatens to veto defense bill unless internet liability shield scrapped
Trump doubles down on defense bill veto threat
Trump says he’ll veto defense bill that calls for renaming Army bases named for Confederate generals
Go ahead Delusional Don. Veto the defense bill for one or both of those reasons. Brand and define your party in that manner.
Arizona GOP Governor Dodges Trump Call While Certifying Election Results | NowThis - YouTube
Arizona's Republican Governor Doug Ducey confirms Trump called during vote certification
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Don the Con is a grifter:
His most current grift involves raising close to $207M after the election, mostly in small donor contributions, for his election lawsuits. While the big print claims that Biden won through fraud and money is needed to fund the lawsuits, the fine print of the solicitations informs the Trumpsters that only a few dollars will be going to so called election defense money. Trump Raises $170 Million as He Denies His Loss and Eyes the Future - The New York Times The sum reached $207M last week. Trump Unveils $207 Million Fundraising Haul Since Election as He Tries to Overturn Results-US News
Trump’s ‘Save America’ PAC Could Pay For Big Macs, Hush Money … Pretty Much Anything (“Trump was a grifter before he was in the White House. He was a grifter while he was in the White House. There’s surely no reason to expect him to stop grifting as he leaves and once he’s gone,” said Robert Weissman, president of the watchdog group Public Citizen. “The special problem this time is, in conning his supporters, he’s also sowing deep distrust of the most basic institutions of our democracy, in ways that may have dire, long-term consequences.”)
Most of their donations will be redirected to Donald's newly formed "leadership" PAC, which he has branded the Save America Fund. Donald can use those funds to pay his personal expenses and exorbitant salaries to family members.
Donald is into false and misleading branding.
The most that Donald could ever do to "Save America" is to forfeit his U.S. citizenship and become a citizen of Russia, which is where he and his family belong, and never speak or write another word about the U.S. or any of its citizens. Those actions will go a long way toward saving America's democracy from Trump and his cult.
A leadership PAC "can make contributions of $5,000 per year to other campaign committees — but is otherwise largely unlimited in how it spends what it has received. The money in the Save America PAC . . . can be used to benefit Trump in innumerable ways. Memberships at golf clubs. Travel. Rallies. Even payments directly to Trump himself, as long as he declares it as income." What the Trump family’s new political committees can and can’t do - The Washington Post
W.C. Fields had a slogan for those contributors. Never Give a Sucker an Even Break (1941) - IMDb Donald certainly know how to milk suckers and that includes his lenders.
Ex-RNC Chair Has 1 Damning Word For People Still Donating To Donald Trump The word is of course "sucker".
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Covid-19:
The pandemic remains "under control" in TrumpWorld.
 |
| As of 12/4/20 |
CDC director's warns of 450K deaths by February
He works in a Covid-19 unit in a parking garage. Trump called it fake
Romney calls Trump's leadership on Covid-19 'a great human tragedy'
When a Trumpster becomes infected with Covid and put on a ventilator, some come to an epiphany then. He Did Not Take Covid Seriously Until he was hospitalized. Now he is a believer-The Washington Post Death can be a cure for willful ignorance. Listening and believing Donald will not add to a person's knowledge but will only contribute to and reinforce a person's ignorance
As South Dakota takes hands-off approach to coronavirus, Native Americans feel vulnerable The republican governor of South Dakota Kristi Noem is just another science denier.
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During the most recent stock rally, I have started to eliminate a few positions that were unrealized losses but recently moved into profit territory. Item # 1 below is an example.
1. Eliminated CNP-Sold 119+ at $23.99:
Quote: CenterPoint Energy Inc. (U.S.: NYSE) | MarketWatch
I mentioned this elimination in a 11/10/20 comment.
Profit Snapshot: Net of +$35.69
This was a failed investment that I was able to turn into a profit through small ball average down purchases and patience.
The trouble started after I made my first purchases when the Texas regulatory body denied CNP's Houston Electric a rate increase. I viewed that order to be confiscatory.
That was followed by the quarterly dividend being cut from $.29 to $.15. CenterPoint Energy, Inc (Holding Co) Common Stock (CNP) Dividend History | Nasdaq
The recent price pop appeared to be more related to the market's surge and CNP's decision to sell assets than fundamentals about the underlying electric utility businesses. CenterPoint soars on plan to sell natural gas utilities -Seeking Alpha
I still have some exposure to Houston Electric's first mortgage bonds.
Last Earnings Report (9/30/20): SEC Filed Press Release
2. Small Ball:
A. Started FLO-Bought 5 at $23.45; 5 at $23.05; 5 at $22.6; 5 at $22.2; 5 at $21.88:
FLO Analyst Estimates | MarketWatch
Average Cost Per Share this account: $22.64 (25 shares)
Dividend: Quarterly at $.20 per share
Yield at AC: 3.53%
Last Ex Dividend: 11/25/20 (owned as of)
5 Year Financials:
There are an abundance of items that impact comparability that are set forth at pages 22-23 of the 2019 Annual Report.
5 Year Chart:
I am not inclined to use the non-GAAP $.29 per share number. The adjusted E.P.S. number was 3 cents better than expected, but produced nonetheless a negative reaction.
I do view it as relevant that GAAP net income is negatively impacted by substantial non-cash depreciation and amortization expenses:
S & P Stock Report (11/20/20): 3 stars with a 12 month PT of $26. Based on what I know now, I would eliminate the position at $25. This is a bunt for a single kind of stock selection.
B. Started FNF-Bought 5 at $33.8:
On 6/1/2020, FNF completed the acquisition of F&G for approximately $2.7B in cash and stock. Fidelity National Financial Completes Acquisition of FGL Holdings; Website: F&G
There was a surge in title orders during the third quarter:
Title orders for refinancings surged 83% on a daily basis during the quarter compared to the 2019 third quarter. That was due to the decline in mortgage rates. Title orders associated with purchases were up 12% on a daily basis. This part of the business will be cyclical dependent on the pace of refinancings and real estate purchases. For now, the decline in interest rates is a tailwind.
Title insurance policies have a long tail unlike claims based policies that cover a one year period and have to be renewed annually. Once a title insurance policy is issued, coverage remains in effect and a claim for insurance coverage may be made years or even decades into the future.
I mentioned this purchase in an 11/14 comment.
Dividend: Quarterly at $.36 per share
Yield at $33.8 = 4.26%
Next Ex Dividend: 12/16/20
5 Year Chart:
2019 Annual Report at pp. 21-22
Last Bond Offering (9/2020): $600M in 2.45% SU notes maturing in 2031 Prospectus
Last Earnings Report (Q/E 9/30/20): SEC Filed Press Release
GAAP E.P.S. from continuing operations: $1.39, adjusted at $1.48
C. Added to KR-Bought 2 at $30.64; 10 at $30.5:
Quote: Kroger Co (KR)
Closing Price 12/4/20: KR $30.58 -$0.30 -0.97%
KR | Kroger Co. Analyst Estimates | MarketWatch
Annual Report for the Fiscal Year Ending on 1/1/20
Last Discussed: Item # 1.J. Restarted KR-Bought 5 at $32.95; 2 at $32.52; 2 at $32.03 (10/3/20 Post) I discussed the last earnings report in that post. The report was for the fiscal quarter ending 8/15/20.
In a news release dated 10/27/20, KR reaffirmed its guidance.
Average Cost Per Share this Account: $31.42 (20 shares)
Dividend: Quarterly at $.18 per share ($.72 annually), last raised from $.16 effective for the 2020 first quarter.
Yield at AC = 2.29%
That dividend yield is below my threshold for out-of-favor dividend-paying stocks.
The analyst knock on Kroger is that earnings this year received a significant boost from the pandemic; and E.P.S. will consequently decline significantly in its fiscal year beginning in late January or early February 2021.
The consensus E.P.S. for the current fiscal year is at $3.29 and at $2.7 for the F/Y ending in late January or early February 2022.
Even at $2.7, the valuation at the current price is reasonable.
My gut, which is my body part making future predictions, has informed me that an E.P.S. of $2.7 is too low, look for a number closer to $3.
5 Year Chart:
Last Earnings Report (Third Fiscal quarter ending on 11/7/20): SEC Filed Press Release
This report was released on 12/3.
GAAP E.P.S. $.8
Non-GAAP E.P.S. $.71
I would use the $.71 per share number which beat the consensus estimate by 5 cents. Kroger EPS beats by $0.05, misses on revenue, raises FY2020 outlook (NYSE:KR) | Seeking Alpha The main adjustment to the reported GAAP E.P.S. of $.8 was to exclude gains from investments.
Guidance for current fiscal year-one more quarter: E.P.S. at $3.3 to $3.35
The Kroger Co. (KR) CEO William McMullen on Q3 2020 Results - Earnings Call Transcript | Seeking Alpha ("Our brands grew at 8.6% in the third quarter and we grew market share. Private Selection grew over 17% and Simple Truth grew nearly 15%. . . Digital sales grew 108% in the third quarter and contributed approximately 4.6% to identical sales without fuel.")
Broker Reports:
Morningstar (12/3/20): 3 stars with a FV of $33. This report is available to Schwab customers without a Morningstar subscription.
Argus (9/14/20): Buy with a $40 PT, raised from $38 (report available to Schwab customers) I do not expect Argus to change its buy rating in response to the the last earnings report.
S & P (12/3/20): 4 stars with a $40 PT (report available to Schwab customers) S & P reiterated its buy rating.
In response to the last earnings report, Credit Suisse, GS, JPM, and UBS maintained their neutral ratings but reduced their price target.
The UBS PT was reduced to $33 from $35.
Credit Suisse adjusted its PT to $34 from $36. The CS report is available to Charles Schwab customers. The analyst recognizes that KR is picking up market share for its competitors, but argues the costs associated with the higher marker share makes that gain less valuable to investors.
GS adjusted its PT to $35 from $37.
JPM adjusted its PT to $34 from $38.
Those adjustments in price targets will cause some selling pressure, at least among institutional investors who pay attention to those recommendations.
D Added to STWD-Bought 1 at $14.29:
Quote: Starwood Property Trust Inc. (STWD)-a hybrid REIT
Stock Information as of 12/4/20:
Starwood Property Trust, Inc. Profile | Reuters
Starwood Property Trust, Inc. Key Developments | Reuters
Average Cost per Share: $17.39 (55+ shares)
Dividend: Quarterly at $.48 per share ($1.92 annually)
Yield at AC = 11.04%
Last Ex Dividend: 9/29/20
Dividend Reinvestment: Yes
Last Buy Discussions: Item # 1.C. Added to STWD-Bought 1 at $15.66, 1 at $15.12, 1 at $14.82; 1 at $13.74 (7/25/20 Post); Item # 1.H. Added 2 STWD at $17.18; 2 at $16.91; 1 at $15.24, 1 at $10.36; 1 at $9.3; 1 at $8.74; 1 at $12.45 ( 4/18/20 Post)
Last Sell Discussion: Item # 1.A. Sold 10 STWD at $25.96 (2/16/2020 Post)
5 Year Chart:
Last Earnings Report (Q/E 9/30/20): SEC Filed Press Release
"The Company’s third quarter 2020 GAAP net income was $151.8 million, or $0.52 per diluted share, and Core Earnings (a non-GAAP financial measure) was $148.6 million, or $0.50 per diluted share."
"Our diversified platform showed its power versus pure-play commercial mortgage REITs, as we deployed nearly two-thirds of the capital this quarter outside our core commercial real estate lending business. Our owned real estate portfolio, over half of which consists of affordable housing, continues to shine, producing a cash on cash yield exceeding 15%. We estimate that we have approximately $3.00 per share of unrealized gains across our owned property assets today. With over $880 million of cash and undrawn debt capacity, our liquidity remains strong and we remain well-positioned to selectively deploy capital going forward.”
The other alternative is to sell all shares at a net profit taking a loss on those lots and several lots bought with dividends. I am not there yet.
Maximum Position: 100 shares
E. Started IRM in Schwab Taxable-Bought 10 at $26.8; 5 at $25.8; 5 at $25.25; 5 at $24.9:
Quote: Iron Mountain Inc (IRM)
I mentioned adding to my position in a 11/10/20 comment.
Closing Price 12/4/20: IRM $29.16 +$1.07 +3.81%
The ETF with the largest weighting in IRM is the Pacer Benchmark Data & Infrastructure Real Estate Sector ETF Overview; SRVR | Pacer ETFs (at 4.33% as of 12/4/20)
This announcement was received positively yesterday. Iron Mountain Announces Industrial Sale-Leaseback Transaction with Blackstone Real Estate Income Trust ("sold a portfolio of 13 industrial facilities to Blackstone Real Estate Income Trust, Inc. (“BREIT”), generating gross proceeds of $358 million." This provides IRM additional liquidity without having to sell more debt.)
Website: Data & Records Management | Shredding | Iron Mountain
2019 Annual Report (risk factor summary starts at page 8)
Last Substantive Buy Discussion: Item # 1.B. Added 3 IRM at $22.99; 2 at $22.31 (6/20/20 Post). I discussed the 2020 first-quarter report in that post.
Average Cost Per Share this Account: $25.91 (25 shares)
Dividend: Quarterly at $.618 per share ($2.472 annually)
Iron Mountain - Stock - Dividend History and Tax Treatment
I view a dividend cut as a possibility and in my opinion advisable.
Yield at AC = 9.54%
Nex Ex-Dividend: 12/14/20
See Item # 1.E above
Average Cost this Account: $26.38 (40+ shares)
Yield at AC this account = 9.37%
I also own shares in 2 Roth IRA accounts and 1 other taxable account. During the Spring meltdown, I started a position in my Vanguard taxable account using a small ball buying restriction but the recovery in price left me holding just 4 shares.
3. Small Ball-Regional Bank Stock Pares:
Investment Category: Regional Bank Basket Strategy
I discussed paring my regional bank stock exposure in prior comments, including this one published on 11/10/20.
I will also discuss the third-quarter earnings report.
I am selling my highest cost lots that increase my dividend yield based on the lowered average cost per share.
Regional bank stocks received a strong uplift in prices starting with Pfizer's announcement on its vaccine's effectiveness. That surge allows me to pare my highest cost lots.
A. Pare BHB-Sold 40 at $24.48 (Highest cost lots Fidelity Taxable Account):
Quote: Bar Harbor Bankshares (BHB)
Investment Category: Regional Bank Basket Strategy
Closing Price 12/4/20: BHB $24.45 +$0.84 +3.56%
Profit Snapshot: +$38.17
This pare reduced my average cost per share in this account from $21.49 to $20.05.
Dividend: Quarterly at $.22
Yield at $20.05: 4.39%
Last Ex-Dividend Date: 11/17/20
Last Buy Discussions: Item # 2.D. Added to BHB-Bought 5 at $17.5; 5 at $14; 2 at $13.8; 2 at $13.5 (5/2/2020 Post); Item # 1.F. Added to BHB-Bought 1 at $19.15 (10/24/20 Post); Item # 1.A.(2/5/20 Post)(discussed 2019 4th quarter report)
Last Earnings Report (Q/E 9/30/20): SEC Filed Press Release
BHB "reported third quarter 2020 net income of $8.4 million or $0.56 per share compared to $5.0 million or $0.32 per share in the same quarter of 2019. The non-GAAP measure of core earnings increased 30% to $9.2 million, or $0.61 per share in the third quarter 2020 compared to $7.3 million or $0.47 per share in the third quarter of 2019."
NPA Ratio: .42%
NPL Ratio: .53%
Charge off ratio: .06%
Coverage ratio: 124% (reserves to non-accrual loans)
Tangible Book Value Per Share: $18.56
The general idea going forward will be to trade the position until my average cost per share is less than tangible book value per share.
"Non-interest income in the third quarter 2020 was $10.1 million compared to $7.6 million in the same quarter in 2019. The increase is primarily due to a $2.2 million increase in mortgage banking income associated with secondary market sales of $86.2 million compared to $20.7 million in the same quarter of 2019."
Mortgage banking was a bright spot for regional banks in the 2020 third quarter.
Other Sell Discussions: Item # 3.B. Eliminated BHB-Sold 54+ Shares at $26.34 (5/18/19 Post)(profit snapshot = $131.1); Item # 1.A. Sold 100 BHB at $30.69-Used Commission Free Trade (7/15/18 Post)(profit snapshot= $1,718.56); Item # 1.A. Sold 50 BHB at $30.02 (5/21/18 Post)(profit snapshot= $666.96; Item #3.A. Sold 100 BHB at $29.55 (4/26/18 Post)(profit snapshot = $682.94); Item # 1. A. Sold 30 BHB at $29.42 (3/25/18 Post)(profit snapshot = $41.02)
BHB Realized Gains to Date: $4,223.71
Last Bond Offering: $40M 4.625% Fixed to Floating Rate Subordinated Notes due 2029
B. Pared Highest Cost PBCT Lot in Vanguard Taxable Account-Sold 5 at $12.55:
Quote: People's United Financial Inc (PBCT)
Closing Price 12/4/20: PBCT $13.23 +$0.34 +2.64%
I own PBCT in 3 taxable accounts and 2 Roth IRA accounts.
Investment Category: Regional Bank Basket Strategy
There was a pop in the share price on 11/9/20 in response to Pfizer's vaccine news.
Closing Price 11/9/20: PBCT $12.77 +$2.28 +21.73%
Profit Snapshot: +$8.35
The average cost per share in this account was reduced from $10.42 to $10.31.
Tangible Book Value Per Share: $10.42 as of 9/30/20
The average cost per share in this account is now below tangible book value per share.
Dividend: Quarterly at $.18 ($.72 annually)
Stock Information | Dividend History | People's United Bank
Yield at $10.31 AC this account: 6.98%
Last Ex-Dividend: 10/30/20
I discussed the third quarter earnings report in a recent post. Item # 1.H. Multiple Small Ball PBCT Purchases (Fidelity Account with an Average Cost Per share of $10.42 (10/24/20 Post); People's United Financial Reports Third Quarter Net Income of $144.6 Million, or $0.34 per Common Share I have nothing further to add to that recent discussion.
Last Sell Discussions: # 3.A. Eliminated PBCT-Sold 101+ at $17.57 (5/22/19 Post); Item # 4 Sold 100 PBCT at $14.61 (9/21/13 Post)
PBCT Realized Gains to Date: $494.88
C. Sold Highest Cost HBNC Lots in Fidelity Taxable-Sold 10 at $14.25 and 5 at $14.8:
Quote: Horizon Bancorp Inc. (HBNC)
Closing Price 12/4/20: HBNC $15.18 +$0.48 +3.27%
Investment Category: Regional Bank Basket Strategy
Profit Snapshot: $46.53 (15 shares)
The average cost per share in this account was reduced from $10.78 to $10.38.
I own this stock in 3 taxable accounts and 2 Roth IRA accounts.
Dividend: Quarterly at $.12 per share
Yield at $10.38 AC this account: 4.62%
Last Ex Dividend: 10/1/20
Tangible Book Value Per Share = $11.29 as of of 9/30/20
Average cost per share in all accounts is below tangible book value per share.
Last Discussed: Item # 1.K Added HBNC Fidelity Taxable Account-Bought 5 at $10.3; 2 at $9.9; 3 at $9.57 (10/10/20 Post)
Prior Sell: Item # 2 Sold 60 HBNC at $24.96 (4/30/12 Post)(+$429.68)
Last Earnings Report (Q/E 9/30/20):
ROA: 1.4% (unadjusted)
ROE: 12.08% (unadjusted)
NPL Ratio: .72%
NIM: 3.39% (adjustment to 3.27%)
The adjustment reduces GAAP income by the after tax impact of gains from security sales:
"record gain on mortgage loan sales of $8.8 million, up 33.1% from the linked quarter and 226.2% from the prior year period"
D. Pared CATY-Sold Highest Cost Lot (3 shares) at $27.01:
CATY Analyst Estimates | MarketWatch
Cathay General Bancorp Key Metrics | Reuters
Investment Category: Regional Bank Basket Strategy
Closing Price 11/9/20 (day of pare): CATY $27.02 +$3.41 +14.44%
The average cost per share in this account was reduced to $23.05 from $23.39. I own this stock in several of my accounts.
Profit Snapshot: +$5.49
Last Buy Discussion: Item # 1.M. Added to CATY- Bought 1 at $23.75; 1 at $21.38; 1 at $21.13(10/3/2020 Post)
Dividend: Quarterly at $.31 per share ($1.24 annually)
Yield at $23.05 AC this account = 5.38%
Last Ex-Dividend: 11/30/20
Available-for-Sale Owned Securities:
Sourced: 10-Q for the Q/E 9/30/20
Last Earnings Report (Q/E 9/30/20 Post): SEC Filed Press Release
"The Company reported net income of $56.8 million, or $0.71 per share, for the third quarter of 2020."
Coverage Ratio: 223.75%
Efficiency Ratio: 51.53%
Charge Off Ratio: (.08%)-net recovery
NPL Ratio: .4% Page 57 10-Q
NPA Ratio: .55% (")
Capital Ratios:
E. Pared NTB-Sold Highest Cost 10 Shares at $32.5:
Quote: Bank of Butterfield Ltd.
Profit Snapshot: $56.56
Closing Price on 12/4/20: NTB $32.38 +$0.89 +2.83%
Last Buy Discussions: Item # 1.F. Added to NTB-Bought 2 at $23.15; 1 at $22.3; 1 at $21.9; 1 at $21.6 (10/10/20 Post); Item # 1.F. Started NTB-Bought 1 at $27.23; 9 at $26.9; 2 at $26.38; 1 at $25.79; 2 at $25.54; 5 at $25.2; 2 at $24.9; 2 at $24.7 (9/12/2020 Post)
This pare reduced my average cost per share in this account from $25.24 to $24.48. I own this stock in several of my accounts.
Dividend: Quarterly at $.44 per share ($1.76 annually)
Yield at AC of $24.48: 7.19%
Last Ex-Dividend: 10/10/20
Last Earnings Report (Q/E 9/30/20): SEC Filed Press Release
E.P.S. $.61
Core E.P.S. $.73
Reconciliation of GAAP vs. Core:
I would go with GAAP E.P.S. of $.61. Some of those items will reduce expenses in 2021.
"The Bank continued its balanced capital return policy. The Board declared a quarterly dividend of $0.44 per common share to be paid on November 30, 2020 to shareholders of record on November 12, 2020. During the third quarter of 2020, Butterfield repurchased 0.7 million common shares under the Bank's current 3.5 million common share repurchase plan authorization.
The current total regulatory capital ratio as of September 30, 2020 was 20.8% as calculated under Basel III, compared to 19.4% as of December 31, 2019. Both of these ratios are significantly above the fully phased Basel III regulatory requirements applicable to the Bank."
The bank has adopted CECL.
Total unrealized gains on the available for sale securities was $183.2M as of 9/30/20.
F. Pared FISI Schwab Taxable-Sold 5 at $20.6 (highest cost lot):
Quote: Financial Institutions Inc. (FISI)
Investment Category: Regional Bank Basket Strategy
Closing Price 12/4/20: FISI $21.48 +$0.64 +3.07%
Profit Snapshot: $23.76
Tangible Book Value Per Share as of 9/30: $22.76
Last buy Discussions: Item # 1.C. Restarted FISI-Bought 10 at $16.17 (6/6/20 Post); Item # 1.D. Added to FISI-Bought 5 at $15.85; 5 at $15.20; 10 at $14.9; 10 at $14.6 and Sold Highest Cost 10 Share lot at $18.07(8/22/20 Post)(discussed 2nd quarter earnings report; profit snapshot = $19.01)
Dividend: Quarterly at $.26 per share ($1.04 annually)
Financial Institutions, Inc. Common Stock (FISI) Dividend History | Nasdaq
Yield at $14.76 AC = 7.05%
Next Ex-dividend date: 12/18/20
Last Earnings Report (Q/E 9/30/20): SEC Filed Press Release
"After preferred dividends, net income available to common shareholders was $11.9 million for the quarter, or $0.74 per diluted share, compared to $12.5 million, or $0.78 per diluted share, for the third quarter of 2019."
"Third quarter 2020 net income and pre-tax pre-provision income reflect approximately $1.6 million of non-recurring expenses related to the previously announced closure of six bank branches and a staffing reduction."
"Net interest margin was 3.22%, one basis point lower than the second quarter of 2020 and seven basis points lower than the third quarter of 2019. The impact on interest-earning asset yield of heightened Federal Reserve interest-earning cash and PPP loans was approximately two basis points and one basis point, respectively, when compared to the second quarter of 2020 and approximately six basis points and five basis points, respectively, when compared to the third quarter of 2019."
"The ratio of annualized net charge-offs to total average loans was 0.06% in the current quarter."
"The Company adopted CECL effective January 1, 2020, which resulted in an increase to the allowance for credit losses - loans of $9.6 million and established a reserve for unfunded commitments of $2.1 million, for a total pre-tax cumulative effect adjustment of $11.7 million."
"The ratio of allowance for credit losses - loans to non-performing loans was 453% at September 30, 2020" (coverage ratio)."
ROA = 1.02%
ROE = 10.72%
Other Sell Discussions: Item # 3 Sold 50 FISI at $24.71 Update For Regional Bank Basket Strategy As Of 8/21/15 - South Gent | Seeking Alpha(profit snapshot = $442.07); Item # 2 Sold 51+ FISI at $24.1 (5/3/2015 Post)(profit snapshot = $254.18); Item # 5 Sold 50 of 150 FISI at $21.16 (10/11/13 Post)(profit snapshot = $59.15)
FISI Realized Gains To Date: $817.18
3. Cash Flow from Interest Payments-Fidelity Taxable 12/1/20:
I use a bond ladder strategy to mitigate interest rate risks.
Those risks are caused both by meaningful percentage increases and declines in interest rates.
The short-term maturities are the hedge against a rise in rates. A constant flow of proceeds from those securities as they mature can be invested in higher yielding ones.
The intermediate and longer-term corporate bonds, which have "make whole" provisions, provide a higher income stream after rates have fallen compared to the yields available for new purchases.
The "make whole" provision, found in $1K par value corporate bond prospectuses, is necessary to mitigate the risk flowing from declining interest rates. The issuer will either avoid an early redemption that costs too much or pay a premium to par value designed to compensate bond owners for losing the future income stream. The make-whole provision is designed to protect corporate bond owners when interest rates are declining.
For municipal bonds that I own, the issuer may redeem at par value, but the optional redemption is generally several years into the future from the time of my purchases (5 to 10 years for most of the ones that I purchased starting in 2017)
With interest rates so low now, I am no longer buying any bonds and CDs anywhere along the maturity spectrum, so the entire portfolio is in a run-off phase.
I am still receiving interest income from bonds that fit into the intermediate and longer term parts of my bond ladder.
The following snapshots are bond interest payments made on 12/1/20 and received in my Fidelity taxable account.
Municipal bonds are sold in 5 bond lots.
The largest position shown above is a Sumner County, TN. GO 10 bond lot bought on 6/14/17, currently rated at AA+ by S & P (Item # 3.A.); Emma Page
Sumner County may redeem at par on or after 12/1/2024. The bond was originally issued in April 2015 and would mature on 12/1/2034 unless redeemed earlier at the issuer's option.
This Sumner County bond, like other TN municipal bonds that I own, trades infrequently, primarily due to the relatively small number of bonds outstanding. There was a recent trade, meaning one within the past 3 months:
Note that the yield price assumes that the bond will be redeemed on 12/1/24, not on the maturity date. That is IMO a correct assumption for a purchaser and seller to make now, but that is not a 100% certain outcome.
The other municipal bonds are 5 bond lots:
The prices for the two Johnson City GO bonds are not a reflection of credit quality but near-term optional redemptions that will be exercised by the issuer. For example, the 3.25% GO maturing in 2035 may be redeemed at par value on or after 6/1/2021. That option will now cause the price to hug par value. Both of those bonds will soon be redeemed at par value.
I own Tennessee municipal bonds in 3 taxable accounts.
The $1K corporate bonds are 1 bond lots except for the Main Street SU which is a 2 bond lot
The Entergy Mississippi, Louisiana and Texas bonds (first snapshot) are first mortgage bonds. Those companies are wholly owned subsidiaries of Entergy (ETR).
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.
