Economy:
Over the 12 month period ending in January 2022, CPI rose 7.5% before the seasonal adjustment. Core CPI increased by 6%:
It is simply incomprehensible to me that the federal funds rate is still at 0% to .25% with QE still in effect.
The FED is so far behind the curve that it would need a telescope to even see the curve.
January 2022 CPI: Inflation rises 7.5% over the past year, even more than expected The 7.5% annual increase is the highest rate since 1982.
Inflation has Federal Reserve critics pointing to money supply surge - The Washington Post Surge does not begin to accurately describe the increase in money supply.
If inflation was caused by excess money creation alone, there would have been problematic inflation occurring much earlier than now. Rapid increases in the money supply starting in 2009 did not create inflation for several reasons. One reason is that the excess supply did not find its way into the real economy but into stocks and bonds.
Excess money supply may create inflationary pressures when other major inflationary pressures are present which would include, by way of example, the energy price surge after the emergence of OPEC and the 1974 oil embargo and the current commodity price surge, excessive federal government fiscal stimulus, major increases in consumer demand, a significant decrease in sourcing products from the cheapest foreign sources and/or supply chain disruptions, and a psychological change where consumers and businesses expect problematic inflation to continue which was the case in the 1970s and may be emerging now.
Homebuyer demand for mortgages drops 10%
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Markets and Market Commentary:
HSBC Says U.S. Stocks No Longer a Buy. Investors Can 'Hide Out' in China Instead. | Barron's ("HSBC views slowing growth momentum, overly optimistic growth expectations, supply-chain constraints, fading inflationary spikes, and shrinking liquidity from central banks among the immediate, key downside risks.") China's stock market is currently in one of its periodic bear markets which started several months ago with the meltdown in China's property sector, fears about U.S. delistings, and a crackdown on technology companies. Normally, I have played China's stock market primarily through the Matthews China Dividend Fund (MCDFX), but do not currently have a position. Some of the major Chinese stocks, like Alibaba Group Holding Ltd. ADR (BABA), are in major bear market trends with no signs yet of a bottom IMO.
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Earnings Reports-Owned Stocks:
AbbVie (ABBV) SEC Filed Press Release (Non-GAAP E.P.S. = $3.31 with consensus at $3.286 per Fidelity; GAAP E.P.S. = $2.26; Net Revenues of $14.886 Billion, an Increase of 7.4 Percent on a GAAP Basis; "Full-Year Diluted EPS of $6.45 on a GAAP Basis, an Increase of 137.1 Percent; Adjusted Diluted EPS of $12.70, an Increase of 20.3 Percent"; "Full-Year Net Revenues of $56.197 Billion on a GAAP Basis, an Increase of 22.7 Percent; Adjusted Net Revenues Were $56.122 Billion"; GAAP earnings include a large charge for intangible asset amortization connected to the Allergan acquisition, AbbVie Completes Transformative Acquisition of Allergan; top product revenues: Humira = $6.746B; Imbruvica = $1.385B; Botox Cosmetic and Therapeutic = $1.297B; Skyrizi = $895M; Rinvoq = $517M; Vraylar = $489M; Venclexta = $488M; Mavyret = $427M; "GAAP diluted EPS guidance for the full-year 2022 of $9.26 to $9.46. AbbVie expects to deliver adjusted diluted EPS for the full-year 2022 of $14.00 to $14.20. The company’s 2022 adjusted diluted EPS guidance excludes $4.74 per share of intangible asset amortization expense, non-cash charges for contingent consideration adjustments and other specified items.")
BCB Bancorp, Inc. (BCBP) 4th Quarter (net income available to common shareholders of $10.443M or $.61 per share with the consensus at $.488 per Fidelity; 2021 E.P.S. at $1.92; the company has preferred stock outstanding; NIM 3.44%, up from 3.35% in the 2020 4th quarter; efficiency ratio = 49.37%; NPL Ratio = .64%; Coverage ratio = 249.3%; Charge offs = $52,000; ROA =1.42%; ROE = 16.25%; "Total noninterest expense was unchanged at
Bristol Myers Squibb (BMY) SEC Filed Press Release (Non-GAAP E.P.S. of $1.83 with the consensus at $1.796 per Fidelity; GAAP E.P.S. of $1.07; 2021 Non-GAAP E.P.S. at $7.51, up from $6.44 in 2020; revenues = $11.985B with Revlimid at $3.328B; Eliquis at $2.671B; Opdivo = $1.988B; Orencia = $864M; Pomalyst/Imnovid = $854M; GAAP E.P.S. includes a $2.417B charge for "Amortization of acquired intangible assets" from the Celgene acquisition, see page 7, supplemental SEC Filing; "2022 GAAP EPS guidance range of $3.37 - $3.67 and reaffirming its non-GAAP EPS guidance range of $7.65 - $7.95; 2022 guidance assumes revenues will be "approximately $47 billion, representing an increase in the low-single digits" and a 2022 revenue decline resulting from a loss of exclusivity in Revlimid and Abraxane. Revlimid sales are expected to be in a range between $9.5B to $10B, down from $12.821B in 2021 or a decline between $2.821B to $3.321B. If I assumed that this drug would grow revenues 6% in 2022, as it did in 2021, the 2022 decrease in revenues due to generic competition would be somewhere in the $3.5B to $4.B range. There are patent settlement agreements in place that limit the amount that can be sold by generic manufacturers until 1/31/2026, though the limits have not been disclosed by the parties, see, e.g. After win at patent office, Bristol Myers inks Revlimid deal with Dr. Reddy's | FiercePharma).
Brookline Bancorp (BRKL) Fourth Quarter Results (net income of $28.5M or $.37 per share with the consensus at $.331 per Fidelity; 2021 E.P.S. at $1.48; NIM = 3.52%, up from 3.23% in the 2020 4th quarter; NPA Ratio = .39%; Charge off ratio = .12%; ROA = 1.35%; ROE = 11.56%; ROTE = 13.84%; tangible book value per share = $10.73, up from $9.96 as of 12/31/20) I did not see an efficiency ratio number and did not bother to calculate one.
Chevron (CVX) SEC Filed Press Release (GAAP net income of $5.055B or $2.63 per share which includes "asset sale gains of $520 million, losses on the early retirement of debt of $260 million and pension settlement costs of $82 million"; Non-GAAP net income of $4.9B or $2.56 per share with the consensus at $3.12 per Fidelity; revenues = $45.861B; 2021 free cash flow = $21.1B, a record for the company)
Exxon (XOM) SEC Filed Press Release (GAAP net income of $8.87B or $2.08 per share; non-GAAP E.P.S. $2.05 with the consensus at $1.938 per Fidelity; 2021 net income of $23B or $5.38 per share, up from ($.33) in 2020; "Oil-equivalent production in the fourth quarter was 3.8 million barrels per day. Excluding entitlement effects, divestments, and government mandates, oil-equivalent production increased 2% versus the prior-year quarter, and was also up 2% versus the prior year, driven by demand recovery."; chemical operations in 2021 produced annual earnings of $7.8B, "reflecting robust industry demand, strong reliability, structural cost reductions, and the company's global supply and logistics advantages."; "In the fourth quarter, the company paid down debt by an additional $9 billion, bringing the full-year reduction to $20 billion")
First Community Bankshares (FCBC) SEC Filed Press Release (GAAP net income of $10.555M or $.62 per share, with the consensus at $.68; NIM = 3.52%, down from 4.18% in the 2020 4th quarter; NPL Ratio = 1.03%; NPA ratio = 73%; Coverage Ratio = 125.36%; Charge off ratio = .22%; ROA = 1.32%; ROE = 9.77%; ROTE = 14.28%; tangible book value per share = $17.34, up from $16.37 as of 12/31/20);
Fifth Third Bancorp (FITB) SEC Filed Press Release (net income of $627M or $.90 per diluted share with the consensus at $.901 per Fidelity; NIM = 2.55%, down from 2.58% in the 2020 4th Quarter; efficiency ratio = 60.6%; charge off ratio = .14%; NPA Ratio = .47%; coverage ratio = 416%; ROA = 1.25%; ROE = 12.2%; ROTE = 16.1%; total risk based capital ratio = 13.4%; tangible book value per share = $22.58)
First Financial Bancorp (FFBC) SEC Filed Press Release (non-GAAP E.P.S. = $.58 with the consensus at $.56 per Fidelity; non-GAAP net income of $54.1M; GAAP E.P.S. = $.50, includes 6.1M tax credit writedown, $3.5M overdraft legal settlement, $4.1M in Summit Funding acquisition costs, and $1.9 in other costs not expected to recur, which generally do of course, such as severance and branch consolidation; of those special items, I would only permit the Summit Funding acquisition expense adjustment, for example, why include a $6.492M gain from selling securities in non-GAAP and exclude a 6.1M tax credit writedown; NIM = 3.23% tax equivalent, down from 3.49% in the 2020 4th quarter; NPL ratio = .66%; NPA Ratio = .37%; Coverage Ratio = 219.96%; tangible book value per share = $12.26
Hope Bancorp (HOPE) SEC Filed Press Release (E.P.S. = $.43 with the consensus at $.406 per Fidelity; net income = $51.6M; 2021 E.P.S. = $1.66; NIM = 3.13%; Efficiency Ratio = 50.7%; NPA Ratio = .62%; NPL RAtio = .78%; Coverage Ratio = 128.75%; ROA = 1.16%; ROE = 9.93%; ROTE = 12.85%; "Noninterest expense for the 2021 fourth quarter decreased to $74.2 million from $75.5 million for the preceding third quarter, largely reflecting lower salaries and employee benefits expense, partially offset by higher OREO expenses. For the 2020 fourth quarter, noninterest expense totaled $71.1 million.")
Huntington Bancshares (HBAN)(Adjusted E.P.S. of $.36 with the consensus at $.324; GAAP E.P.S. reported at $.26; GAAP includes acquisition related expenses of 9 cents per share, Huntington Completes Merger With TCF Financial; NIM = 2.84%, down from 2.94% in the 2020 4th quarter; NPL ratio = .67%; Charge off ratio = .12%; Coverage Ratio = 294%; other ratios negatively impacted by acquisition related expenses; "Noninterest expense decreased $68 million from the third quarter, or 5% to $1.2 billion. Excluding Notable Items, noninterest expense decreased $21 million, or 2%, reflecting realization of cost synergies related to the TCF acquisition"; total risk based capital ratio = 13.13%; tangible book value per share = $8.06).
Mondelez International (MDLZ) SEC Filed Press Release (Adjusted E.P.S. at $.71, up 9.1% using CC, with the consensus at $.72; Reported E.P.S. also at $.71; "revenues increased +4.9% primarily driven by Organic Net Revenue growth of +5.4%" ; "For 2022, the company expects performance in line with its long-term growth algorithm of 3+ percent Organic Net Revenue growth, high single-digit Adjusted EPS growth on a constant currency basis and Free Cash Flow of $3+ billion. The company estimates currency translation would decrease 2022 net revenue growth by approximately 2.5 percent with a negative $0.08 impact to Adjusted EPS.") The main MDLZ products sold in the U.S. are Oreo cookies, Philadelphia Cream Cheese, belVita biscuits, Ritz Crackers, Halls Cough drops, Trident gum Triscuit and Wheat Thins.
Novartis (NVS) SEC Filed Report (while NVS has its headquarters in Switzerland, it reports in USDs; core E.P.S. of $1.40, with the consensus at $1.405 per Fidelity; revenues = $13.229B, up from $12.77B in the 2020 4th quarter (+4%,+6% in CC); Reported E.P.S. of $7.29 includes a $14.6B gain from selling Roche shares; 2021 core E.P.S. = $6.29, up from $5.78 in 2020; some major 4th quarter drug revenues: Cosentyx =$1.243B, up 13% in CC, Entresto $949M, up 34% in CC; Gilenya = $656M, down 14%, the largest % gain was Kisqali, a breast cancer drug, up 58% in CC to $258M; "The Novartis Board of Directors proposes a dividend payment of CHF 3.10 per share for 2021, up 3.3% from CHF 3.00 per share in the prior year, representing the 25th consecutive dividend increase since the creation of Novartis in December 1996)
Southside Bancshares (SBSI) SEC Filed Press Release $28.7M or $.88 per share with the consensus at $.756 per Fidelity; NIM = 3.23%, up from 3.2% in the 2020 4th quarter; Efficiency ratio = 47.61% ; NPL Ratio = .07%; Charge 0ffs at zero; Coverage ratio = 1,390.89%; ROA = 1.57%; ROE = 12.67%; ROTE = 16.8%; total risk based capital ratio = 18.15%; tangible book value per share. = $21.77; noninterest expense to average total assets = 1.72%)
Verizon Communications (VZ) SEC Filed Press Release ("$1.11 in EPS, compared with $1.11 in fourth-quarter 2020; adjusted EPS*, excluding special items, of $1.31, compared with $1.21 in fourth-quarter 2020, an 8.3 percent increase year over year; non-GAAP E.P.S. consensus at $1.286 per Fidelity; "revenue of $34.1 billion, down 1.8 percent from fourth-quarter 2020. Adjusting for the sale of Verizon Media on September 1, operating revenue grew 4.8 percent year over year."; "1,058,000 retail postpaid net additions, including 558,000 phone net additions, resulting in 142.8 million total retail connections."; "company ended 2021 with free cash flow* of $19.3 billion, a decrease from $23.6 billion at year-end 2020."; "company's net unsecured debt balance increased year over year by $37.5 billion to $133.7 billion at the end of fourth-quarter 2021")
RNC votes to condemn Cheney, Kinzinger for serving on House committee investigating Jan. 6 attack on the Capitol by pro-Trump mob - The Washington Post "The resolution accused the two of participating in a “Democrat-led persecution of ordinary citizens who engaged in legitimate political discourse” as the committee investigates the insurrection in which a mob of Trump supporters stormed the building, injured 140 members of law enforcement and vandalized the Capitol to stop the affirmation of Joe Biden’s electoral college win. The attack led to the deaths of five people.") The Republican National Committee adopted the resolution by unanimous voice vote after no debate. It just more proof that Donald still controls his party.
G.O.P. Declares Jan. 6 Attack ‘Legitimate Political Discourse’ - The New York Times
One GOP member of the Arizona House has temporarily blocked the passage of a law granting the republican controlled state legislature the right to cancel the certified election results and to require a new election, apparently continuing that process until the GOP's presidential candidate wins. Arizona Republicans Sought to Overturn Votes. Rusty Said No. - The New York Times When that legislation becomes law, a democrat would understandably conclude why bother to vote, thereby ensuring republican candidates will win. A non-profit voting rights group called that proposed law “one of the most comprehensive attacks on nonpartisan election administration and voter access that we have seen.” The Markup: Weekly Election Legislation Update for Monday, January 24 - Voting Rights Lab Of course, it is irrelevant to Arizona's republicans how many audits, including the one that they commissioned, establish that Biden won the state.
Members of America's anti-democracy party in North Carolina were thwarted by the North Carolina Supreme Court in their effort to rig election results. North Carolina Supreme Court rejects 'unconstitutional' redistricting map over gerrymandering-The Washington Post ("In the map drawn by Republicans, Rep. G.K. Butterfield’s district replaced Black voters with rural White voters. Butterfield (D), who is Black, decided not to run for reelection, saying the plan was “racially gerrymandered.”) This was a 4 to 3 vote along party lines, with the 3 republicans voting in favor of rigged elections which is to be expected. The redistricting maps drawn by republicans would likely take away 2 democrat held congressional seats. North Carolina Supreme Court strikes down redistricting maps
Don the Authoritarian: "Just saw Mike Pence's statement on the fact that he had no right to do anything with respect to the Electoral Vote Count, other than being an automatic conveyor belt for the Old Crow Mitch McConnell to get Biden elected President as quickly as possible." Trump went after 'Old Crow Mitch McConnell' in a statement issued after Pence said the former president was 'wrong'
In Trump's America, a republican Vice President can reject the certified election results showing that a Democrat won the exact number of states needed to throw the election to the republican candidate who lost.
Republican Justices are generally in favor of republican dominated state governments rigging congressional elections to favor Trumpsters. Supreme Court stops lower court order on Alabama redistricting - The Washington Post; Supreme Court lets GOP-drawn Alabama congressional map stay in place (5 Republican Justices allow republicans in Alabama to deny blacks the ability to elect more than 1 congressional representative)
Trump Used ‘Burn Bags’ To Destroy Docs, Took Records To Mar-a-Lago - YouTube Those are clearly illegal actions but Don the Con is above the law and will likely never spend a day in jail. Meet the guys who tape Trump's papers back together- POLITICO ("Under the Presidential Records Act, the White House must preserve all memos, letters, emails and papers that the president touches, sending them to the National Archives for safekeeping as historical records."); National Archives asks Department of Justice to investigate Trump taking boxes of official documents to Mar-a-Lago: report
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1. Small Ball-Regional Bank Basket Strategy:
Investment Category: Regional Bank Basket Strategy
The recent rise in interest rates have once again created hope that the long period of net interest margin compression will soon end. I have been paring my regional bank allocation. Through the 2021 4th quarter earnings reports that I have reviewed, NIM is still declining Y-O-Y. This is all about risk management for an investor who does not have to take risks but is willing to do so using a variety of risk mitigation trading techniques.
A. Sold 5 BUSE at $27.78:
Quote: First Busey (BUSE)
Profit Snapshot: $51.65
Last Buy Discussion: Item # 2.B. Bought 5 BUSE at $17.45 (11/13/20 Post)
Dividend: Quarterly at $.23 per share, last raised from $.22 effective for the 2020 4th quarter payment.
First Busey Corporation Dividend History | Nasdaq
Last Ex Dividend: 1/20/22
Last Earnings Report (Q/E 12/31/21):
GAAP Net Income of $29.9M or $.53 per share
Non-GAAP E.P.S. of $.61
Using information provided by I/B/E/S, Fidelity uses the GAAP E.P.S. number of $.53 and claims the consensus was at $.55. I doubt that the consensus E.P.S. was a GAAP number since that would be unusual, but there is no way for me know for certain.
Calculation of GAAP to Non-GAAP: Page 39 Supplemental SEC Filing
Adjusted NIM at 2.31%, down from 3.06% in the 2020 4th Q.
Adjusted Efficiency Ratio: 59.09%
NPA Ratio: .17%
NPL Ratio: .30%
Charge off ratio: .01%
Adjusted ROA: 1.05%
Adjusted ROTE: 14.3%
Tangible Book Value per share: $17.01, up from $16.66 as of 12/31/20
In response to this earnings report, Raymond James raised BUSE to outperform with a $31 PT.
B. Pared RF after earnings report-Sold 2+ shares at $22.13:
Quote: Regions Financial Corp. (RF)
Profit Snapshot: $24.84
Last Substantive Buy Discussion: Item # 3.C. Added 5 RF at $10.37; 5 at $9.3; 5 at $8; 5 at $7.5 (4/11/20 Post)
RF Price Chart: I am wary of this bank given its historical tendency to blow itself up. I do not know whether or not the culture has changed that would prevent price crashes similar to what happened in 2000, due to a mild recession, and during the Near Depression period and its aftermath. The pandemic induced recession had a similar price effect on historically well managed regional banks. As with other regional bank stocks, the stock started to rollover months before the market started to collapse.
I did nibble on RF stock in 2009. Bought 50 RF at $3.47 (3/12/2009 Post)
Average cost this account after pare = $8.83 (20+ shares)
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| Snapshot Intraday 1/21/22 after pare |
Dividend: Quarterly at $.17 per share ($.68 annually), last raised from $.155 effective for the 2021 third quarter payment.
RF is one of the banks that slashed its quarterly dividend to $.01 per share in 2009. Regions Financial Corporation (RF) Dividend History | Seeking Alpha
Last Ex Dividend: 12/2/21
Yield at $8.83 = 7.7%
Last Earnings Report (Q/E 12/31/21): SEC Filed Press Release
GAAP E.P.S. $.43
Non-GAAP E.P.S. $.44
Consensus at $.481 per Fidelity
Non-interest expense increased 5 percent
NIM = 2.83%, down from 3.13% in the 2020 4th quarter
RF provides an adjusted NIM number of 3.34% which IMO just creates confusion. I had to go to a different SEC filing to see how that one was computed:
I am not going to accept an adjustment for "excess cash" .
Charge off ratio = .2%
Tangible book value per share = $11.38
RF Realized Gains to Date: $325.63
C. Added to AROW in Fidelity Taxable - Bought 5 at $34.9; 5 at $34.4 and then eliminated the 15 shares in that account at $36.1 in response to the earnings report:
Quote: Arrow Financial Corp. (AROW)
Purchases:
Most of the total profit originates from a 52+ share sale in 2018: Item # 1. Sold 52+ AROW at $37.5 (7/2/18 Post)(profit snapshot = $661.34) The stock price has basically flatlined since that sale after adjusting the price for the annual 3% stock dividend. That is a fairly common result among small regional bank stocks due in large part to continued NIM compression and the intervening pandemic reduced recession in 2020.
Current AROW position in Taxable Accounts:
Schwab: 10 shares with an AC per share at $26.12.
Vanguard: 5 shares with an AC per share at $24.9
Since I do not own enough shares to receive 1 share when AROW pays a 3% stock dividend, I receive cash in lieu of a fractional share:
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| Vanguard $5.23 Cash in Lieu of Stock Dividend |
I still view AROW as a quality micro cap regional bank. However, this last earnings report and a 5 year range bound price chart caused me to sell my recently bought shares and to remain on the sidelines for now.
D. Eliminated CZNC-Sold 20 at $25.38:
Quote: Citizens & Northern Corp. (CZNC)
Profit Snapshot: +$175.24
Recent Buy Discussions: Item # 1.A. Added to CZNC-Bought 10 at $17.2; 5 at $16.65; 5 at $15.55 (9/26/20 Post); Item # 1.B. Restarted CZNC- Bought 10 at $17.7; 5 at $17.07 (6/13/20 Post)
Dividend: Quarterly at $.28 per share, last raised from $.27 effective for the 2021 first quarter.
CZNC Dividend History | Nasdaq
5 Year Chart: Unimpressive but suggests a trading strategy of buying the dips and selling the rips.
Last Earnings Report (Q/E 12/21/21): SEC Filed Press Release
GAAP E.P.S. = $.46 includes loss on prepayment of borrowings and merger related expenses.
Consensus at $.49
2021 GAAP E.P.S. = $1.92
NIM = 3.65%
"Accretion and amortization of purchase accounting adjustments had a net positive impact on net interest income of $431,000 in the fourth quarter 2021 as compared to a net positive impact of $563,000 in the third quarter 2021."
As previously discussed, I ignore that accounting convention adjustment.
Efficiency Ratio = 59.54%
NPL Ratio = 1.36%
NPA Ratio = .94%
Coverage Ratio = 63.8%
ROA = 1.25%
ROE = 9.73%
Tangible book value per share = $15.58
Sell Discussions: Item # 2.E. Pared CZNC -Sold 5+ at $25.41 (8/6/21 Post)(profit snapshot = $40.57); Item # 5 Sold 50 CZNC at $20.29 - Update For Regional Bank Basket Strategy As Of 6/6/16 - South Gent | Seeking Alpha ($25.28); Item # 1 Sold 50 CZNC at $21.09-Update For Regional Bank Basket Strategy As Of 12/4/15 - South Gent | Seeking Alpha (profit snapshot = $76.48);Item # 3.F. Sold 100 CZNC at $19.52(8/25/14 Post)(profit snapshot =$48.5); Item # 1. Sold 100 CZNC at $16.53 (9/2/11 Post)(profit snapshot = $517.61).
CZNC Realized Gains to Date: $1,063.11
Current Position: None
2. Other Small Ball Trades:
A. Eliminated RMT Vanguard Taxable - Sold 10 at $10.36:
Sponsor's Website: Royce Micro-Cap Trust (RMT)
RMT Page at Morningstar (not rated)
SEC Filed Semi-Annual Shareholder Report for the period ending 6/30/21
SEC Filing - Portfolio as of 9/30/21
Profit Snapshot: +$44.46
Last Buy Discussions: Item # 1.E. Bought 10 RMT at $5.9 (6/6/20 Post); Item # 2.B. Added 50 RMT at $7.91 (8/21/19 Post); Item # 1 Bought 50 RMT at $8.03-Used Commission Free Trade. (6/15/19 Post)
Recent Dividend History: Most of the dividend payments will be sourced from long term capital gains.
Data Date of 1/21/22 Trade:
Net Asset Value Per Share: $11.52
Closing Market Price: $10.17
Discount: -11.72%
3 Year Average Discount = -12.68
Sourced: RMT-CEF Connect
Dividends: Quarterly under a managed distribution plan
Recent Dividend History:
Some Prior Sell Discussions: Item # 1.A. Eliminated RMT-Sold 113+ at $8.7 (2/22/20 Post)(profit snapshot +$79.95); Item # 1.B. Sold 100 RMT at $8.73 (1/25/20 Post)(profit snapshot =$23.25); Item # 3.A. Sold 274+ RMT at $8.9 - Schwab Taxable (8/3/17 Post)(profit snapshot = $45.41); Item 3.A. Sold 276+ RMT at $8.4 (5/17/17 Post)(profit snapshot = $61.77); Item # 4. Sold 200 RMT in RI at $9.3 (10/22/12)(profit snapshot = $84.37). In 2017, I had a series of RMT transactions in my Interactive Brokers account that netted a $98.04 profit:
The largest prior annual realized gain was in 2014:
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| 759+ shares at +$2,269.01 |
Net Realized Gains = $ 2,661.80
I am down to owning 30+ shares in my Schwab Taxable account:
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| Price as of 1/21/22 |
B. Eliminated RVT Vanguard Taxable-Sold 10 at $17.5:
Quote: Royce Value Trust Inc. Overview- A Stock CEF
SEC Filed Shareholder Report for Semi Annual Period Ending 6/30/21
SEC Filing-Portfolio as of 9/30/21
Royce Value Trust (RVT)-Morningstar (unrated)
Profit Snapshot: $50.7
Last Buy Discussion: Item # 1.H. Bought 10 RVT at $12.43 (7/25/21 Post)
Recent Dividend History:
Data Date of 1/21/22 Trade:
Net Asset Value Per Share: $18.24
Market Price: $17.17
Discount: -5.87%
Average 3 year discount: -11.34%
Sourced: RVT- CEF Connect
Dividends: Quarterly under a managed distribution plan
Sell Discussions: Item # 3.C. Sold 100 RVT at $14.51 (5/22/19 Post)(profit snapshot = $87.61); Item # 1 Sold 505+ RVT at $15.89 (8/3/13 Post)(profit snapshot = $436.03)
Other Profit Snapshots:
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| 2016 RVT 105+ shares +$26.23 |
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| 2017 RVT 216+ shares +$190.93 |
RVT Realized Gains to Date: $791.50
I am down to owning 10+ RVT shares in my Schwab taxable account:
Through 1/31/22, the RVT 3 year standard deviation is 23.9 with a 1.25 Beta.
In 2021, the standard deviation for my Schwab account was at 2.17.
The "conservative" portfolio, defined as 50% Bloomberg U.S. Aggregate Bond, 30% FTSE 3 month treasury bill, 15% S & P 500 and 5% MSCI EAFE, had a 2021 SD of 2.64 and a 2021 total return of 3.75%.
My standard deviation in that account rose slightly since I last reported it here. Schwab Account: Risk Adjusted Total Return 1 Year (11/13/21 Post)(SD of 2.03 with a 10.29% return for the 1 year period ending 11/10/21)
C. Eliminated DNB-Sold 5 at $20.19 (Vanguard Taxable):
Quote: Dun & Bradstreet Holdings Inc.
DNB Analyst Estimates | MarketWatch
10-Q for the Q/E 9/30/21 (long term debt at $3.5435B; long term pension and post retirement benefits = $308.1M)
Investment Category: Lottery Ticket Basket
The classification is based primarily on a high debt level with an erratic earnings history and a lack of dividend support.
Profit Snapshot: $16.65
Buy Discussion: Item # 1.M. Bought 5 DNB at $16.96 (10/1/21 Post)
D. Added to EPRT-Bought 5 at $26.6; 5 at $24.7:
Quote: Essential Properties Realty Trust Inc.- Internally Managed Net Lease REIT
This is a new name for me.
Last Buy Discussion: Item # 1.C. Bought 10 at $27.95 (12/31/21 Post) I discussed the 2021 third quarter report in that post. SEC Filed Press Release; SEC Filed Investor Presentation for 2021 Third Quarter
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Average cost per share = $26.76 (20 shares)
Dividend: Quarterly at $.25 per share, last raised from $.24 effective for the 2021 4th Q. payment.
Yield at AC = 3.74%, rounded up.
I will keep averaging down in 5 share lots until I hit 100 shares. I will then start to pare the position when and if I can sell the highest cost lot bought first profitably.
The company has not yet released its 2021 4th quarter report.
E. Added to GDO in Schwab Taxable-Bought 10 at $16.17 and then Sold 10 at $16.8:
Current Position: 100 shares this account
History this Account:
Quote: Western Asset Global Corp Defined Opportunity Fund Inc. (GDO)- Leveraged Bond CEF scheduled to liquidate on or about 12/2/24
Investment Category: Monthly Income Generation
Most Recent Buy Discussions: Item # 1.A. Bought 100 GDO at $16.72 in Schwab Taxable Account (11/7/2020 Post); Item # 2.A. Added 35 GDO at $16.78; 5 at $15.6: 5 at $14.34; 5 at $13.75; 5 at $12.3; 5 at $11.4 (4/11/20 Post)
Sponsor's Website: Western Asset Global Corporate Defined Opportunity Fund Inc. (GDO)
SEC Filings: GDO SEC Filings
WA Global Corporate Defined Opportunity Fund Inc- Last SEC Filed Shareholder Report for the 6 month period ending 10/31/21(page 46 contains the borrowing information: "For the year ended October 31, 2021, the Fund had an average daily loan balance outstanding of $90,000,000 and the weighted average interest rate was 0.76%. At October 31, 2021, the Fund had $90,000,000 of borrowings outstanding per this Credit Agreement.") Reducing the assets owned by the fund will cut into the sponsor's compensation however.
Dividend: Monthly at $.101 per share with some ROC support
Next Ex Dividend Date: 2/17/21
Average Cost per share this account:
Tax Cost per share: $16.42 reduced by ROC adjustments to the Cost Basis
Actual Cost per share: $16.71 before ROC adjustments
Yield at 16.71 AC before ROC Adjustments = 7.25%
When I sell a security bought for income generation that supports the dividend in part through return of capital, the goal is generally to sell shares profitably using the original cost rather than the adjusted tax cost reduced by the ROC dividend payments. I am then earning a total return in excess of the dividend payments. Total return in these cases would be inaccurately computed by double counting the ROC component of the dividend and the profit generated by the ROC adjustment to the cost basis.
Data Date of 1/24/22 Trade:
Closing Net Asset Value per share: $17.16
Closing Market Price: $16.27
Discount: -5.19%
Sourced: GDO-CEF Connect
Most Recent Sell Discussion: Item # 2.C. Pared GDO in Fidelity Account-Sold 10 at $18.62 (7/23/21 Post)
Last Elimination: Item # 1.B. Eliminated GDO-Sold 224+ at $16.47-Used Commission Free Trade (3/3/19 Post)(contains snapshots of prior round-trips; the total realized gain at that time was at $961.09)
F. Added $50 to FSMEX at $70.74; $50 at $69.46:
My only serious mutual fund position is the T. Rowe Price Capital Appreciation Fund (PRWCX). My position is almost 1,100 shares, and I am taking the distributions in cash. The 2021 total distribution for that fund was $3,567.43.
Quote: Fidelity Select Medical Technology and Devices Portfolio Overview- Mutual Fund
Expense ratio = .7%
Last Discussed: Item # 2.M. (5/14/21 Post)
Fidelity® Select Medical Tech and Devices (FSMEX)-Morningstar (currently rated 5 stars)
Dividends: This fund has not paid an ordinary income dividend since 2017. The fund has been paying dividends sourced from capital gains.
G. Added to Lotto VKTX- Bought 5 at $3.5:
Quote: Viking Therapeutics
Viking Therapeutics – Pipeline Overview
VKTX SEC Filings; VKTX 2020 Annual Report
Investment Category: Blackjack Hand, part of the Lottery Ticket Basket
Last Discussed: Item # 1.I. Added to LOTTO VKTX- Bought 5 at $4.67; 3 at $4.35; 10 at $3.95 (1/20/22 Post)
Average cost per share: $4.65 (35 shares)
Last Loss Report (Q/E 12/31/21): Released yesterday.
Loss of $12.735M or ($.16) per share.
"At December 31, 2021, Viking held cash, cash equivalents and short-term investments of $202.1 million, compared to $248.4 million as of December 31, 2020."
The press release discusses recent developments. I did not see anything new that I had not already mentioned here.
As previously discussed, investors are not expressing confidence that VK2809 for treating NASH, currently in a Phase 2b trial, will be successful. If it proved to be effective and approved for marketing, then this stock will no longer be struggling to stay over $4 per share with a market cap of less than $300M.
The company has moved a potentially promising weight loss drug into a Phase 1 trial after animal studies produced favorable results. Viking Therapeutics Announces Initiation of Phase 1 Clinical Trial of VK2735, Company's Lead Dual GLP-1/GIP Receptor Agonist - Jan 10, 2022
While I would not draw any conclusions about animal test results, the confirmation of those results in human trials would cause this stock to skyrocket.
H. Pared FENY-Sold Highest Cost 18 Shares:
Quote: Fidelity MSCI Energy Index ETF
Cushing, OK WTI Spot Price FOB (Dollars per Barrel)
Sponsor's Website: FENY | ETF Snapshot - Fidelity
Expense Ratio = .08%
Holdings Weighted at > than 1% as of :
Profit Snapshot: $14.05
Average cost this account after pare: $14.65 (100+ shares)
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| Snapshot Intraday 1/27/22 after pare |
Dividends: Quarterly at a variable rate
Last 4 Dividends = $.56 per share
Yield at $14.65 AC and $.56 Annual Rate = 3.82%, rounded down.
Last Eliminations: Item # 4 Eliminated FENY-Sold 60+ shares at $18.83 (10/26/17 Post)(profit snapshot = $127.78); Item # 5 Sold 50 FENY at $27.81 (8/6/14)(profit snapshot = $115.96). A bear market in energy stocks started in 2014. It remains to be seen whether the long term secular bear market has ended with the latest upturn. Cyclical bull markets in the context of long term bear markets can be powerful to the upside before the bear market trend reasserts itself.
H. Fidelity Liquidation of SLG Fractional Share Created Out of 1 share by Minor Reverse Split and Bought Back the 1 share at $69.9:
Quote: SL Green Realty Corp.- An Office REIT NYC Metropolitan Area.
SL Green Realty Corp Profile | Reuters
SL Green Realty Corp Key Developments | Reuters
SL Green Realty Corp Key Metrics | Reuters
Investment Categories: Equity REIT Common and Preferred Stock Basket Strategy; Monthly Income Generation; Bond Substitute.
Last Buy Discussions: Item # 2.I. Bought 5 SLG at $69.82 (11/5/21 Post); Item # 1.H. Added to SLG-Bought 2 at $45.59; 1 at $44.23; 1 at $43; 1 at $42.5; 1 at $40; 1 at $38 and 1 at $35.5 (6/20/20 Post)
For an unsatisfactory reason IMO, SLG recently had a 1.0306 for 1 share reverse stock split.
The rationale was given as follows: "a special dividend with a value of $2.4392 per share, which was paid on January 18, 2022 in the form of common stock of the Company. To mitigate the dilutive impact of the stock issued for the special dividend, the board of directors also authorized a reverse stock split, which was effective on January 21, 2022. The split ratio for the reverse stock split was 1.03060-for-1.) I received cash in lieu of the "special dividend" since the stock dividend would otherwise be for a fractional share.
Since the reverse split resulting in a fractional share, Fidelity liquidated it.
Forced Liquidation:
Profit Snapshot: +$.46
Average Cost per share after transactions: $71.54 (5 shares)
The reverse split increased my average cost per share.
Dividend: Monthly at $.3033 per share (regular only)
Yield at AC = 5.09%, rounded up.
Last Ex Dividend: 1/28/22
Last Earnings Report (Q/E 12/31/21): SEC Filed Press Release
"Manhattan same-store office occupancy was 93.0% as of December 31, 2021, inclusive of leases signed but not yet commenced."
"The Company reported FFO for the quarter ended December 31, 2021 of $108.3 million, or $1.52 per share, excluding the accounting impact of the Company's reverse stock split in January 2022, as compared to FFO for the same period in 2020 of $119.2 million, or $1.56 per share. FFO for the fourth quarter of 2021 includes $2.9 million, or $0.04 per share, of reserves against certain financing investments, and $3.6 million, or $0.05 per share, of transaction related costs."
"During the fourth quarter of 2021, the Company signed 52 office leases in its Manhattan office portfolio totaling 573,806 square feet. The average lease term on the Manhattan office leases signed in the fourth quarter of 2021 was 5.9 years and average tenant concessions were 7.0 months of free rent with a tenant improvement allowance of $56.17 per rentable square foot, excluding leases signed at One Vanderbilt Avenue. Thirty-one leases comprising 406,117 square feet, representing office leases on space that had been occupied within the prior twelve months, are considered replacement leases on which mark-to-market is calculated. Those replacement leases had average starting rents of $70.80 per rentable square foot, representing a 3.9% decrease over the previous fully escalated rents on the same office spaces." (emphasis added).
The trends noted above in bold letters need to reverse before I would anticipate a meaningful rise in the stock price. A continuation of those trends will pressure the stock IMO to the downside.
Last Sell Discussion: Item # 1.H. Sold 5 SLG at $50; 2 at $52.19 and 1 at $61.54 (6/20/20 Post)
I will soon lose two SLG Operating L.P. SU bonds, which makes me more willing to own the common as a bond substitute. Item # 2.C. Bought 2 S L Green Operating LP 3.25% SU Bonds Maturing on 10/15/22 at a TC of 99.579 (6/20/20 Post)
I have also bought and sold SLG's equity preferred stock. SL Green Realty Corp. 6.5% Preferred Series I The last purchase was discussed in this post: Item # 4.A. Restarted SLGPRI-Bought 10 at $20.75; 10 at $19 (5/9/20 Post) I sold those shares at $25.96. Item # 3.A. (9/12/20 Post) SLG can call that preferred stock at its $25 par value but has not yet done so. The rise in interest rates may explain why that relatively high cost preferred stock remains outstanding.
I. Added to RYLD in Fidelity Taxable-Bought 5 at $22.48:
Quote: Global X Russell 2000 Covered Call ETF (RYLD)
Sponsor's Website: Russell 2000 Covered Call ETF
Investment Categories: Monthly Income Generation/Bond Substitute
Dividends: Monthly at a variable rate that hovered near $.25 per share last year, except for the January dividend that was $.2272.
Excluding a $.306 short term capital gain distribution for 2021, paid in early 2022, the fund paid out $2.70+ per share in dividends last year.
Average cost per share this account: $23.05 (15 shares)
Last Ex Dividend: 1/24/22 at $.2232 per share
Next Ex Dividend: 2/22/22
Approximate Yield (using the 2021 number of $2.7 per share): 11.71%
I have nothing further to add to my recent discussion: Item # 2.E. Added to RYLD in Fidelity Taxable Account-Bought 5 at $23.84 (1/7/22 Post)
Goal: Any total return in excess of the dividend payments before any ROC adjustments.
J. Added 10 AMCR at $11.54-Schwab Taxable Account:
Quote: Amcor PLC
SEC Filed Press Release-4th quarter earnings; SEC Filed Investor Presentation
Investment category: Bond Substitute with a very faint flavor of dividend growth
Just an example of small ball channel trading. AMCR has been in a narrow channel movement over the past year.
I am just buying back 10 of the 30 shares recently sold which was discussed in my last post along with the 2021 4th quarter earnings report. Item # 1.E. Pared AMCR in Schwab Account - Sold 30 out 130 at $12.36 (2/3/22 Post)(profit snapshot $11.67). Using FIFO accounting, I sold 30 of the 100 shares bought first that were my highest cost shares. Item # 2 Bought 100 AMCR at $11.97 (6/12/21 Post)
Average cost per share this account: $11.79 (110 shares)
The AC per share was reduced from $11.81.
Dividend: Quarterly at $.12 per share
Yield at new AC = 4.07%
Next Ex Dividend: 2/22/22
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.
