Economy:
Federal Reserve cuts rates to zero and launches massive $700 billion quantitative easing program The FED's Jihad Against Savers is BACK.
Mnuchin Warns Senators of 20% Unemployment Without Coronavirus Stimulus | Top News | US News I believe that widely reported comment was a major contributor to last Wednesday's downdraft. And, I view it as irresponsible.
JPM's economist is predicting a 4% decline in U.S. GDP this quarter and a whopping 14% decline in the second quarter, assuming Congress passes a $1 trillion fiscal stimulus package. JP Morgan slashes forecast for U.S. GDP, sees 14% second-quarter drop By Reuters
Goldman Sachs had previously predicted a 5% decline in second quarter GDP growth. It revised its estimate to -24% yesterday. Goldman sees unprecedented stop of economic activity, with Q2 GDP contracting 24%; Goldman Sachs now says US GDP will shrink 24% next quarter amid the coronavirus pandemic - which would be 2.5 times bigger than any decline in history | Markets Insider The time bomb has been lit.
U.S. businesses need a $2 trillion bailout to avoid a possible ‘global depression’, says Guggenheim’s Minerd - MarketWatch
It will take a $1.5 trillion stimulus to save America, former Fed economist says - MarketWatch
Kudlow says coronavirus relief package worth more than $2 trillion This statement was made earlier today. The size of the relief package has now doubled in the past few days. Larry Kudlow, a former media personality, is Donalds chief economic advisor. He graduated with a B.A. in history from Rochester University.
Investor Ray Dalio: US corporate losses from coronavirus to top $4T
Mnuchin Warns Senators of 20% Unemployment Without Coronavirus Stimulus | Top News | US News I believe that widely reported comment was a major contributor to last Wednesday's downdraft. And, I view it as irresponsible.
JPM's economist is predicting a 4% decline in U.S. GDP this quarter and a whopping 14% decline in the second quarter, assuming Congress passes a $1 trillion fiscal stimulus package. JP Morgan slashes forecast for U.S. GDP, sees 14% second-quarter drop By Reuters
Goldman Sachs had previously predicted a 5% decline in second quarter GDP growth. It revised its estimate to -24% yesterday. Goldman sees unprecedented stop of economic activity, with Q2 GDP contracting 24%; Goldman Sachs now says US GDP will shrink 24% next quarter amid the coronavirus pandemic - which would be 2.5 times bigger than any decline in history | Markets Insider The time bomb has been lit.
U.S. businesses need a $2 trillion bailout to avoid a possible ‘global depression’, says Guggenheim’s Minerd - MarketWatch
It will take a $1.5 trillion stimulus to save America, former Fed economist says - MarketWatch
Kudlow says coronavirus relief package worth more than $2 trillion This statement was made earlier today. The size of the relief package has now doubled in the past few days. Larry Kudlow, a former media personality, is Donalds chief economic advisor. He graduated with a B.A. in history from Rochester University.
Investor Ray Dalio: US corporate losses from coronavirus to top $4T
Fauci: Americans are 'going to have to hunker down significantly more' to fight coronavirus
U.S. Virus Plan Anticipates 18-Month Pandemic and Widespread Shortages - The New York Times
FedEx (FDX) suspends 2020 profit outlook
Retail store closures in the US could explode because of coronavirus
Gov. Gavin Newsom orders all Californians to stay at home
Nevada governor shutters gambling, dining to halt virus - ABC News
The economic consequences from the 1918 Spanish Flu epidemic were short lived. Pages 19-21 St. Louis Fed report from November 2007.pdf
Echoes of the Great Depression? U.S. economy could post biggest contraction ever - MarketWatch
The economic consequences from the 1918 Spanish Flu epidemic were short lived. Pages 19-21 St. Louis Fed report from November 2007.pdf
Echoes of the Great Depression? U.S. economy could post biggest contraction ever - MarketWatch
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Markets and Market Commentary:
I hope no one followed the Duck's stock market advice:
Watch How the Coronavirus Spread Across America - The New York Times
It is important to keep in mind that Donald is both incompetent and ignorant, two major failings in a U.S. President that are only magnified by his unwillingness to learn and egotistical beliefs in his judgment. He is not as he claims to be an Extremely Stable Genius.
His incompetence appeared early in life when he bankrupted businesses that he tried to operate.
Trump then found success in creating an image, accepted by the gullible, that he was a genius business person. Donald Trump's Real Secret To Riches: Create A Brand And License It; How Trump has made millions by selling his name - Washington Post
Then Donald was able to license his name to others who took the business risks and burnished that self-created image of business acumen with a reality TV show and even more self promotion books. Donald Trump’s Business Failures Were Very Real | The New Yorker; Here Are All of Trump’s Bankruptcies and Failed Businesses.
For Americans whose brains have not yet calcified from lack of use, the self promotion book "Art of the Deal" published in November 1987 is nothing more than a Trump Reality Creation that deserves to be awarded the Chutzpah of the Century. Trump lost more than $1 billion in a decade, tax returns show: New York Times
I would not rule out a 14% to 24% GDP decline in the second quarter which is the range now being predicted by several economists due to the Trump's administration's failure to take the pandemic seriously for two months.
What are the conditions that would result in those near term future forecasts to prove accurate?
I believe that it would require the coronavirus pandemic to accelerate through June and into July, requiring that large scale shutdowns continue through the early summer months.
What would cause the pandemic to accelerate into mid-summer?
I believe that would require that the current shutdowns fail to stem the pandemic to levels that would prevent a return to normal.
The trajectory of the decline can be altered through changes in stimulus package now being discussed in D.C.
Credit markets signal the US could be heading towards financial crisis Certain sectors of the economy are already in a disaster zone.
Fed moves to help businesses get short-term funding in commercial paper market
Why a ‘disorderly’ U.S. dollar surge is being blamed for amplifying the stock-market selloff and global market volatility - MarketWatch
Small caps fall to four-year lows, and trader warns of 'more pain'
U.S. stock-index futures trigger ‘limit-down’ rule. Here’s how limit rules and stock-market circuit breakers work - MarketWatch (3/18/20)
Doofus Don thought the Stock Jocks would love the Fed's drastic action taken last weekend. Trump applauds Fed's move to slash interest rates and says investors 'should be very thrilled'
Investors' thrilling response occurred on Monday 2/16 (the largest point drop in U.S. stock market history) DJIA: 20,188.52 -2,997.10 -12.93%
Top forecaster who exited stocks weeks ago predicts ‘rolling bear markets’ until 2022 - MarketWatch
Coronavirus Rips Apart Apparel Industry: 4 Players Raise Alarm - March 12, 2020 - Zacks.com
‘Volatility is as much your friend as your enemy.’ Panicking about the Dow? Meet the long-term star investor who’s buying - MarketWatch
Stocks will bottom before US coronavirus cases peak: Art Hogan
I hope no one followed the Duck's stock market advice:
It is important to keep in mind that Donald is both incompetent and ignorant, two major failings in a U.S. President that are only magnified by his unwillingness to learn and egotistical beliefs in his judgment. He is not as he claims to be an Extremely Stable Genius.
His incompetence appeared early in life when he bankrupted businesses that he tried to operate.
Trump then found success in creating an image, accepted by the gullible, that he was a genius business person. Donald Trump's Real Secret To Riches: Create A Brand And License It; How Trump has made millions by selling his name - Washington Post
Then Donald was able to license his name to others who took the business risks and burnished that self-created image of business acumen with a reality TV show and even more self promotion books. Donald Trump’s Business Failures Were Very Real | The New Yorker; Here Are All of Trump’s Bankruptcies and Failed Businesses.
For Americans whose brains have not yet calcified from lack of use, the self promotion book "Art of the Deal" published in November 1987 is nothing more than a Trump Reality Creation that deserves to be awarded the Chutzpah of the Century. Trump lost more than $1 billion in a decade, tax returns show: New York Times
I would not rule out a 14% to 24% GDP decline in the second quarter which is the range now being predicted by several economists due to the Trump's administration's failure to take the pandemic seriously for two months.
What are the conditions that would result in those near term future forecasts to prove accurate?
I believe that it would require the coronavirus pandemic to accelerate through June and into July, requiring that large scale shutdowns continue through the early summer months.
What would cause the pandemic to accelerate into mid-summer?
I believe that would require that the current shutdowns fail to stem the pandemic to levels that would prevent a return to normal.
The trajectory of the decline can be altered through changes in stimulus package now being discussed in D.C.
Credit markets signal the US could be heading towards financial crisis Certain sectors of the economy are already in a disaster zone.
Fed moves to help businesses get short-term funding in commercial paper market
Why a ‘disorderly’ U.S. dollar surge is being blamed for amplifying the stock-market selloff and global market volatility - MarketWatch
Small caps fall to four-year lows, and trader warns of 'more pain'
U.S. stock-index futures trigger ‘limit-down’ rule. Here’s how limit rules and stock-market circuit breakers work - MarketWatch (3/18/20)
Doofus Don thought the Stock Jocks would love the Fed's drastic action taken last weekend. Trump applauds Fed's move to slash interest rates and says investors 'should be very thrilled'
Investors' thrilling response occurred on Monday 2/16 (the largest point drop in U.S. stock market history) DJIA: 20,188.52 -2,997.10 -12.93%
Top forecaster who exited stocks weeks ago predicts ‘rolling bear markets’ until 2022 - MarketWatch
Coronavirus Rips Apart Apparel Industry: 4 Players Raise Alarm - March 12, 2020 - Zacks.com
‘Volatility is as much your friend as your enemy.’ Panicking about the Dow? Meet the long-term star investor who’s buying - MarketWatch
Stocks will bottom before US coronavirus cases peak: Art Hogan
Exxon, after debt rating cut, looking to 'significantly' cut expenses - MarketWatch
Thermo Fisher ships coronavirus tests, aims to make 5 million per week
Ashford Hospitality's sub $1 common share price is the one with strongest bankruptcy signal based on price. Ashford Hospitality Trust Inc. (AHT) It needs to eliminate its cash dividend and to defer its preferred stock dividends. The external management needs to take a substantial voluntary compensation cut lasting at a minimum until year end which will not happen. If they do not, they do risk losing their gravy train to secured creditors.
Utilities break out to big gains, as sector relatively insulated from downturn- Seeking Alpha (3/17/20) That did not last.
Closing Prices Last Friday (3/20/20):
XLU $47.82 -$4.12 -7.93%: SPDR Select Sector Fund-Utilities
DUK $68.40 -$6.65 -8.86%: Duke Energy Corporation
AEP $71.45 -$9.36 -11.58%: American Electric Power Company
D $67.22 -$4.63 -6.44% : Dominion Energy, Inc.
Citizens Financial Group Joins Other U.S. Banks in Temporarily Suspending Share Repurchase Activity This removes price support.
Apple Hospitality REIT Takes Steps to Mitigate Impact of COVID-19 Those measures include suspending the monthly dividend and the $50M in non-essential capital improvements previously scheduled for completion this year. The Company also drew down its credit facility, though $150M still remains. Apple claimed to have $300M of cash on hand. I own shares and support these decisions under the circumstances.
Coca-Cola warns on guidance miss-Seeking Alpha; Coca-Cola sells $5B in senior unsecured notes-Seeking Alpha
Chatham Lodging Trust Temporarily Suspends Dividend to Preserve Shareholder Value
Hersha Hospitality Trust Provides Portfolio Update Related to COVID-19 Outbreak Hersha suspended both its common and preferred dividends and revoked the prior declaration for dividend payments on those securities this quarter. This will save $72.5M this year. The preferred share dividends will continue to accrue and will have to be paid in full when and if Hersha survives and resumes a common shares cash dividend. The company also suspended its capital expenditures and is taking steps to curb expenses including hotel closures, staff reductions and closures of hotel bars and restaurants. This company is just attempting to survive now. I own shares in HT and HTPRD. COVID-19 is a black swan event for this industry.
Gold is setting records dating back over 5,000 years — against silver - MarketWatch According to one analyst, the gold to silver ratio is at its highest level in over 5,120 years. I was not around then so I do not know. I did nibble last week on SLV. This is a snapshot of my entire SLV position as of 3/20/20:
Last SLV Eliminations: Item # 2. C. Eliminated SLV-Sold 100 at $14.26 (7/10/19 Post); Item # 3.A. Sold 60 SLV at $15.18-Used Commission Free Trade (2/6/19 Post); Item # 3.A. Sold 50 SLV at $16.55 (9/7/17 Post)
++
Coal Jobs:
Before the 2016 election and for about a year or so afterwards, Donald claimed that he would be bringing back jobs in the coal industry. Of course, he is just a carnival barker. This is what has actually happened in that industrial sector:
Bureau of Labor Statistics Data
The number of jobs are below where they were in January 2017. In return, Donald has allowed the coal industry to increase its pollution related activities. EPA rolls back Obama-era plan limiting coal emissions; E.P.A. to Roll Back Rules to Control Toxic Ash from Coal Plants - The New York Times
+++++++
Portfolio Management:
My largest allocation remains cash held in brokerage money market funds. The next largest allocation, around $300K lower than the cash MM allocation, is Tennessee Municipal bonds with an average credit rating of AA. Somewhat smaller than the municipal bond allocation is in short term treasury bills. Then the next highest category would be CDs maturing over the next two years. Stocks and investment grade corporate bonds are roughly equal in their respective percentages allocations. All of those estimates a pretty rough guesses made without looking.
{The Tennessee municipal bonds have actually gone up in value even though the third party pricing services used by brokers, claim that values have plummeted. None of the bonds have actually traded within 10% of the values currently being assigned by those services}
The allocations that are moving down are the treasury bills and CDs due to maturities and an unwillingness to buy more at current yields.
Cash is moving higher due to proceeds from maturing CDs, bonds, and treasury bills that have not yet been reallocated to other assets plus the constant flow of interest and dividend income. The dividend income will largely be directed now into reinvestment. Interest income is received in cash.
Risk asset allocations that are moving up include common and preferred stocks, exchange traded bonds, and investment grade corporate bonds maturing within 1 year.
I will continue to take-a-licking-and-keep-on-ticking in Stock Land, though the Goldman forecast of a 24% decline in second quarter GDP will keep me cautious and my enthusiasm easily contained without any effort.
It may now take 20+ trades to build a position to 100 shares.
I will focus more on pricing anomalies in the bond market.
Investors pull record $108 billion out of bond funds this week - MarketWatch Investment grade bond funds reportedly bore the brunt of the selling which coincides with what I was seeing in individual bond prices last week.
In several January 2020 posts, I discussed why I was going to take my annual goal for capital gains that month. Most of that annual goal was hit by selling two mutual funds, realizing a total gain of +$23,714.61. Item 1 Eliminated OTCFX (1/15/20 Post); Item # 1 PRDGX (1/22/20 Post) I have already met the goal of at least $30K in capital gains this year.
Last year, I eliminated several T.Rowe Price stock funds, including the following: Item # 1.A. Sold All Shares of the T. Rowe Price Health Science Fund at $74.16 (9/1/2019)(profit snapshot = $1,166.12); Item # 1.A. Eliminated the T. Rowe Price Spectrum Fund (PRSGX) at $22.73 (3/27/19 Post)(profit snapshot = $5,439.27); and Item 1.A. Eliminated the T. Rowe Price Spectrum International Fund at $13.12 (PSLIX)(4/3/19 Post)(profit snapshot = $3,118.68). Smaller T.Rowe Price fund positions were also eliminated last year.
The eliminations in stock mutual funds and ETFs starting in 2019 is reminiscent of what I have done in the past when I had far less money that I do now. E.G. 2007 Stock Fund Eliminations and Pares During parabolic stock market rises, I generally move into a bunker mentality in slow motion that may take 1 to 2 years before I am in the bunker waiting for incoming. That was the case leading up to 2000 when I eliminated my stock allocation altogether.
I would prefer to be early rather than late for sells.
For buys I would prefer to be a little late than too early.
I kept only the five star rated T. Rowe Price Capital Appreciation (PRWCX) after the aforementioned January 2020 eliminations, which is a balanced fund. Yesterday, I bought $100 worth of PRWCX shares which closed at $24.6, down 1.6% compared to the -4.34% for the S & P 500. I may turn on the dividend reinvestment option which was turned off 2 or so years ago.
I also eliminated all of my Vanguard mutual funds while keeping a small position in the Vanguard Capital Opportunity Fund (VHCOX), which was pared down to 78+ shares. The pare occurred in January 2018 at $71.16. Item # 4 (1/21/18 Post) Closing Price 3/20/20: VHCOX 47.81 -1.54 -3.12% I have been taking the dividends in cash but may change that option to reinvestment soon.
While I sold several stock positions in January and February, I have sold only 2 in March. I eliminated both General Mills and Kellogg and discuss those sells in Item # 1 below.
I do not anticipate that any trading profits will be realized on stocks bought since the volatility event started until deep in the second half.
For now, every purchase is an average down that is either the lowest price in the current chain or at a price that reduces my average cost per share.
Substantial price appreciation will be necessary for me to sell the highest cost lots profitably.
My dividend income this year is currently projected to be around 5 times higher than last year due to the purchases of dividend stocks with rich yields that are becoming richer by the day now. This increase Y-O-Y in dividend income may go up over 10 times.
There is no shortage of dividend stocks that have gone down over 50% from their recent highs.
The rapid rises in stock dividend yields can be seen in the selection of buys that I discuss in every post.
I would estimate that my stock allocation is currently around 7% of assets held in brokerage and mutual fund accounts.
Over the past week, my primary reallocation out of cash has been into investment grade corporate bonds maturing within 1 year, with most of those maturing in 2 to 6 months.
I will, however, continue to do small ball "wave buying programs" in stocks. I am also starting to buy back some stock ETFs and to reestablish positions in stocks previously eliminated at higher prices. Some of those purchases will be discussed in posts spanning the next several months. I have already identified the purchases that I will discuss through May which were purchased prior to today.
I will be discussing some of those bond purchases in a new section that will generally be referenced as short term investment grade bonds as an alternative to treasury bills and money market funds yielding near zero percent. See Item # 4 below
Some discussions will be out of time order. (e.g. restarting the ETF MGC last week with two 1 share purchases, discussed in Item # 1.I. below). When I do small ball wave buying in that account where I am adding to existing positions, MGC will now be included in that "buy program".
Hopefully, the passage of a $2 trillion stimulus package no later than next week will change the mood on Wall Street and put a floor near current index levels.
I previously thought the most analogous period to the past 30 days, focusing just on the S & P 500 and the VIX rather than the real economy, was in October 2008.
I took these snapshots earlier this morning:
It is probable that my interest income will increase Y-O-Y due to several factors: (1) current higher yields from existing positions and (2) the higher yields being acquired now in short term corporate bonds as well as a smattering of exchange traded bonds that have plummeted in price.
++++++
Thermo Fisher ships coronavirus tests, aims to make 5 million per week
Ashford Hospitality's sub $1 common share price is the one with strongest bankruptcy signal based on price. Ashford Hospitality Trust Inc. (AHT) It needs to eliminate its cash dividend and to defer its preferred stock dividends. The external management needs to take a substantial voluntary compensation cut lasting at a minimum until year end which will not happen. If they do not, they do risk losing their gravy train to secured creditors.
Utilities break out to big gains, as sector relatively insulated from downturn- Seeking Alpha (3/17/20) That did not last.
Closing Prices Last Friday (3/20/20):
XLU $47.82 -$4.12 -7.93%: SPDR Select Sector Fund-Utilities
DUK $68.40 -$6.65 -8.86%: Duke Energy Corporation
AEP $71.45 -$9.36 -11.58%: American Electric Power Company
D $67.22 -$4.63 -6.44% : Dominion Energy, Inc.
Citizens Financial Group Joins Other U.S. Banks in Temporarily Suspending Share Repurchase Activity This removes price support.
Apple Hospitality REIT Takes Steps to Mitigate Impact of COVID-19 Those measures include suspending the monthly dividend and the $50M in non-essential capital improvements previously scheduled for completion this year. The Company also drew down its credit facility, though $150M still remains. Apple claimed to have $300M of cash on hand. I own shares and support these decisions under the circumstances.
Coca-Cola warns on guidance miss-Seeking Alpha; Coca-Cola sells $5B in senior unsecured notes-Seeking Alpha
Chatham Lodging Trust Temporarily Suspends Dividend to Preserve Shareholder Value
Hersha Hospitality Trust Provides Portfolio Update Related to COVID-19 Outbreak Hersha suspended both its common and preferred dividends and revoked the prior declaration for dividend payments on those securities this quarter. This will save $72.5M this year. The preferred share dividends will continue to accrue and will have to be paid in full when and if Hersha survives and resumes a common shares cash dividend. The company also suspended its capital expenditures and is taking steps to curb expenses including hotel closures, staff reductions and closures of hotel bars and restaurants. This company is just attempting to survive now. I own shares in HT and HTPRD. COVID-19 is a black swan event for this industry.
Gold is setting records dating back over 5,000 years — against silver - MarketWatch According to one analyst, the gold to silver ratio is at its highest level in over 5,120 years. I was not around then so I do not know. I did nibble last week on SLV. This is a snapshot of my entire SLV position as of 3/20/20:
++
Coal Jobs:
Before the 2016 election and for about a year or so afterwards, Donald claimed that he would be bringing back jobs in the coal industry. Of course, he is just a carnival barker. This is what has actually happened in that industrial sector:
The number of jobs are below where they were in January 2017. In return, Donald has allowed the coal industry to increase its pollution related activities. EPA rolls back Obama-era plan limiting coal emissions; E.P.A. to Roll Back Rules to Control Toxic Ash from Coal Plants - The New York Times
+++++++
Portfolio Management:
My largest allocation remains cash held in brokerage money market funds. The next largest allocation, around $300K lower than the cash MM allocation, is Tennessee Municipal bonds with an average credit rating of AA. Somewhat smaller than the municipal bond allocation is in short term treasury bills. Then the next highest category would be CDs maturing over the next two years. Stocks and investment grade corporate bonds are roughly equal in their respective percentages allocations. All of those estimates a pretty rough guesses made without looking.
{The Tennessee municipal bonds have actually gone up in value even though the third party pricing services used by brokers, claim that values have plummeted. None of the bonds have actually traded within 10% of the values currently being assigned by those services}
The allocations that are moving down are the treasury bills and CDs due to maturities and an unwillingness to buy more at current yields.
Cash is moving higher due to proceeds from maturing CDs, bonds, and treasury bills that have not yet been reallocated to other assets plus the constant flow of interest and dividend income. The dividend income will largely be directed now into reinvestment. Interest income is received in cash.
Risk asset allocations that are moving up include common and preferred stocks, exchange traded bonds, and investment grade corporate bonds maturing within 1 year.
I will continue to take-a-licking-and-keep-on-ticking in Stock Land, though the Goldman forecast of a 24% decline in second quarter GDP will keep me cautious and my enthusiasm easily contained without any effort.
It may now take 20+ trades to build a position to 100 shares.
I will focus more on pricing anomalies in the bond market.
Investors pull record $108 billion out of bond funds this week - MarketWatch Investment grade bond funds reportedly bore the brunt of the selling which coincides with what I was seeing in individual bond prices last week.
In several January 2020 posts, I discussed why I was going to take my annual goal for capital gains that month. Most of that annual goal was hit by selling two mutual funds, realizing a total gain of +$23,714.61. Item 1 Eliminated OTCFX (1/15/20 Post); Item # 1 PRDGX (1/22/20 Post) I have already met the goal of at least $30K in capital gains this year.
Last year, I eliminated several T.Rowe Price stock funds, including the following: Item # 1.A. Sold All Shares of the T. Rowe Price Health Science Fund at $74.16 (9/1/2019)(profit snapshot = $1,166.12); Item # 1.A. Eliminated the T. Rowe Price Spectrum Fund (PRSGX) at $22.73 (3/27/19 Post)(profit snapshot = $5,439.27); and Item 1.A. Eliminated the T. Rowe Price Spectrum International Fund at $13.12 (PSLIX)(4/3/19 Post)(profit snapshot = $3,118.68). Smaller T.Rowe Price fund positions were also eliminated last year.
The eliminations in stock mutual funds and ETFs starting in 2019 is reminiscent of what I have done in the past when I had far less money that I do now. E.G. 2007 Stock Fund Eliminations and Pares During parabolic stock market rises, I generally move into a bunker mentality in slow motion that may take 1 to 2 years before I am in the bunker waiting for incoming. That was the case leading up to 2000 when I eliminated my stock allocation altogether.
I would prefer to be early rather than late for sells.
For buys I would prefer to be a little late than too early.
I kept only the five star rated T. Rowe Price Capital Appreciation (PRWCX) after the aforementioned January 2020 eliminations, which is a balanced fund. Yesterday, I bought $100 worth of PRWCX shares which closed at $24.6, down 1.6% compared to the -4.34% for the S & P 500. I may turn on the dividend reinvestment option which was turned off 2 or so years ago.
I also eliminated all of my Vanguard mutual funds while keeping a small position in the Vanguard Capital Opportunity Fund (VHCOX), which was pared down to 78+ shares. The pare occurred in January 2018 at $71.16. Item # 4 (1/21/18 Post) Closing Price 3/20/20: VHCOX 47.81 -1.54 -3.12% I have been taking the dividends in cash but may change that option to reinvestment soon.
While I sold several stock positions in January and February, I have sold only 2 in March. I eliminated both General Mills and Kellogg and discuss those sells in Item # 1 below.
I do not anticipate that any trading profits will be realized on stocks bought since the volatility event started until deep in the second half.
For now, every purchase is an average down that is either the lowest price in the current chain or at a price that reduces my average cost per share.
Substantial price appreciation will be necessary for me to sell the highest cost lots profitably.
My dividend income this year is currently projected to be around 5 times higher than last year due to the purchases of dividend stocks with rich yields that are becoming richer by the day now. This increase Y-O-Y in dividend income may go up over 10 times.
There is no shortage of dividend stocks that have gone down over 50% from their recent highs.
The rapid rises in stock dividend yields can be seen in the selection of buys that I discuss in every post.
I would estimate that my stock allocation is currently around 7% of assets held in brokerage and mutual fund accounts.
Over the past week, my primary reallocation out of cash has been into investment grade corporate bonds maturing within 1 year, with most of those maturing in 2 to 6 months.
I will, however, continue to do small ball "wave buying programs" in stocks. I am also starting to buy back some stock ETFs and to reestablish positions in stocks previously eliminated at higher prices. Some of those purchases will be discussed in posts spanning the next several months. I have already identified the purchases that I will discuss through May which were purchased prior to today.
I will be discussing some of those bond purchases in a new section that will generally be referenced as short term investment grade bonds as an alternative to treasury bills and money market funds yielding near zero percent. See Item # 4 below
Some discussions will be out of time order. (e.g. restarting the ETF MGC last week with two 1 share purchases, discussed in Item # 1.I. below). When I do small ball wave buying in that account where I am adding to existing positions, MGC will now be included in that "buy program".
Hopefully, the passage of a $2 trillion stimulus package no later than next week will change the mood on Wall Street and put a floor near current index levels.
I previously thought the most analogous period to the past 30 days, focusing just on the S & P 500 and the VIX rather than the real economy, was in October 2008.
I took these snapshots earlier this morning:
 |
| Average Yields for CDs, Treasuries and Corporate Bonds |
 |
| Treasury Yield Curve |
++++++
Trump:
As Dow wipes out over 3 years of stock-market gains, here’s a warning about calling the bottom - MarketWatch The DJIA is now below where it was on Don the Con's inauguration day.
Donald gave himself 10 out of 10 for his coronavirus response. Trump gives himself 10 out of 10 on coronavirus response | TheHill
That was surprising to me.
I thought he would say 100 on a 1 to 10 scale with a 10 being perfect.
Everything Donald does is either perfect or so far beyond perfect that only God can come close to his perfection. Trump Says His Coronavirus Response Has Been Total Perfection | Vanity Fair
Trump's Statements About the Coronavirus - FactCheck.org
Trump dissed coronavirus pandemic worry, now claims he warned about it
Trump's own words contradict claim he's always viewed coronavirus as 'very serious' - ABC News
Trump Shrugged Off Repeated Intelligence Warnings About Coronavirus Pandemic: Report
President Trump closed the White House pandemic office. I ran it. - The Washington Post
Trump Supporters Know Where to Turn in a Crisis: To Him - The New York Times Trumpster's trust in Donald is unshakeable since he will tell it like it is. President Trump made 16,241 false or misleading claims in his first three years - The Washington Post
Trump's coronavirus claims haven't matched response reality Donald has only gotten worse over the years since he bankrupted six businesses, lost $1B over a short period, and then published a book claiming he was an astute businessman.
Tracking Trump’s false or misleading coronavirus claims-The Washington Post;
Fareed's Take: Coronavirus brings out the worst in Trump Donald is in a perpetual daily cycle of being the worst human that he can be. Maybe the pandemic's impact on his reelection chances will cause him to snap out of that mode for a few weeks. Perhaps the nation will become weary of an incompetent, ignorant, lying, and narcissistic demagogue and his cult soon rather than in 4 years.
Infighting, missteps and a son-in-law hungry for action: Inside the Trump administration’s troubled coronavirus response
Mismanagement, missed opportunities: How the White House bungled the coronavirus response
Americans kept wondering what the president wanted them to do about coronavirus. Finally, Trump offered some guidance. ("President Trump for weeks dismissed the danger of the novel coronavirus. He distracted himself by stoking unrelated feuds and nursing grievances. He shared little concrete information about the spreading pandemic, and much of what he did share was false..")
How Many Adults Are at Risk of Serious Illness If Infected with Coronavirus? | The Henry J. Kaiser Family Foundation
A CDC how-to manual on crisis communication shows how the Trump administration’s coronavirus messaging is dangerous - The Washington Post
Older Americans are more worried about coronavirus — unless they’re Republican - The Washington Post
'We’ll take them all': Demand for ventilators spikes as coronavirus looms - ABC News;
Trump urges states to secure their own medical supplies for coronavirus | TheHill;
Trump to Governors on Ventilators: ‘Try Getting It Yourselves’ - The New York Times
Donald believes that any leader, other than himself of course, is responsible for whatever happens. And, if something does not happen, then any leader, other than Donald, is responsible:
For Donald, "The Buck Stops Anywhere But on His Desk".
Donald's personality requires him to take credit for everything that is positive and to blame others whenever anything of a negative nature happens. The Trumpsters eat it up, crediting Donald as the source of all positive news and merely a victim of any negative developments.
In the Alternate Reality of TrumpWorld, it is even possible for Doofus Don to recreate reality by making statements that are contradicted by his recent statements caught on video and in Donald's tweets. Trump says he knew coronavirus was a pandemic 'long before' it was declared | TheHill; Fact check: Trump tries to erase the memory of him downplaying the coronavirus - CNN; Trump Now Claims He Always Knew the Coronavirus Would Be a Pandemic - The New York Times
Trump, promoting unproven drug treatments, insults NBC reporter at coronavirus briefing
When asked by a reporter what he would tell Americans who were worried, Donald offered the following comforting words: "I say that you are a terrible reporters. That's what I say." Trump viciously attacks NBC News reporter in extended rant after being asked for message to Americans worried about coronavirus - CNN
+++
Trump ordered to expand document search in suit alleging he endorsed pyramid scam - The Washington Post;
Trump defrauded investors in marketing scheme, lawsuit says - The Washington Post;
Donald Trump’s “American Communications Network” Multi-Level Marketing Boondoggle | National Review; Judge Rules Trump Can Be Sued For Marketing Scheme Fraud
+++
As Dow wipes out over 3 years of stock-market gains, here’s a warning about calling the bottom - MarketWatch The DJIA is now below where it was on Don the Con's inauguration day.
Donald gave himself 10 out of 10 for his coronavirus response. Trump gives himself 10 out of 10 on coronavirus response | TheHill
That was surprising to me.
I thought he would say 100 on a 1 to 10 scale with a 10 being perfect.
Everything Donald does is either perfect or so far beyond perfect that only God can come close to his perfection. Trump Says His Coronavirus Response Has Been Total Perfection | Vanity Fair
Trump's Statements About the Coronavirus - FactCheck.org
Trump dissed coronavirus pandemic worry, now claims he warned about it
Trump's own words contradict claim he's always viewed coronavirus as 'very serious' - ABC News
Trump Shrugged Off Repeated Intelligence Warnings About Coronavirus Pandemic: Report
President Trump closed the White House pandemic office. I ran it. - The Washington Post
Trump Supporters Know Where to Turn in a Crisis: To Him - The New York Times Trumpster's trust in Donald is unshakeable since he will tell it like it is. President Trump made 16,241 false or misleading claims in his first three years - The Washington Post
Trump's coronavirus claims haven't matched response reality Donald has only gotten worse over the years since he bankrupted six businesses, lost $1B over a short period, and then published a book claiming he was an astute businessman.
Tracking Trump’s false or misleading coronavirus claims-The Washington Post;
Fareed's Take: Coronavirus brings out the worst in Trump Donald is in a perpetual daily cycle of being the worst human that he can be. Maybe the pandemic's impact on his reelection chances will cause him to snap out of that mode for a few weeks. Perhaps the nation will become weary of an incompetent, ignorant, lying, and narcissistic demagogue and his cult soon rather than in 4 years.
Infighting, missteps and a son-in-law hungry for action: Inside the Trump administration’s troubled coronavirus response
Mismanagement, missed opportunities: How the White House bungled the coronavirus response
Americans kept wondering what the president wanted them to do about coronavirus. Finally, Trump offered some guidance. ("President Trump for weeks dismissed the danger of the novel coronavirus. He distracted himself by stoking unrelated feuds and nursing grievances. He shared little concrete information about the spreading pandemic, and much of what he did share was false..")
How Many Adults Are at Risk of Serious Illness If Infected with Coronavirus? | The Henry J. Kaiser Family Foundation
A CDC how-to manual on crisis communication shows how the Trump administration’s coronavirus messaging is dangerous - The Washington Post
Older Americans are more worried about coronavirus — unless they’re Republican - The Washington Post
'We’ll take them all': Demand for ventilators spikes as coronavirus looms - ABC News;
Trump urges states to secure their own medical supplies for coronavirus | TheHill;
Trump to Governors on Ventilators: ‘Try Getting It Yourselves’ - The New York Times
Donald believes that any leader, other than himself of course, is responsible for whatever happens. And, if something does not happen, then any leader, other than Donald, is responsible:
Donald's personality requires him to take credit for everything that is positive and to blame others whenever anything of a negative nature happens. The Trumpsters eat it up, crediting Donald as the source of all positive news and merely a victim of any negative developments.
In the Alternate Reality of TrumpWorld, it is even possible for Doofus Don to recreate reality by making statements that are contradicted by his recent statements caught on video and in Donald's tweets. Trump says he knew coronavirus was a pandemic 'long before' it was declared | TheHill; Fact check: Trump tries to erase the memory of him downplaying the coronavirus - CNN; Trump Now Claims He Always Knew the Coronavirus Would Be a Pandemic - The New York Times
Trump, promoting unproven drug treatments, insults NBC reporter at coronavirus briefing
When asked by a reporter what he would tell Americans who were worried, Donald offered the following comforting words: "I say that you are a terrible reporters. That's what I say." Trump viciously attacks NBC News reporter in extended rant after being asked for message to Americans worried about coronavirus - CNN
+++
Trump ordered to expand document search in suit alleging he endorsed pyramid scam - The Washington Post;
Trump defrauded investors in marketing scheme, lawsuit says - The Washington Post;
Donald Trump’s “American Communications Network” Multi-Level Marketing Boondoggle | National Review; Judge Rules Trump Can Be Sued For Marketing Scheme Fraud
+++
So is this tweet misleading?
On 3/13, the day referenced by the Duck, the DJIA did have the largest point gain in history which is not the same as the largest percentage gain. Donald had probably forgotten that this gain occurred after a -2,352.60 point loss the previous day. There was also a 1,464 point decline on 3/11 and another thrilling drop of 2,013 that stated the week on 3/10. The DJIA had a 2,677 net point loss for the week ending 3/13. I must have missed Donald celebrating that number in a tweet.
The largest DJIA point loss in history occurred on Monday, 3/16, after Donald's Saturday tweet trumpeting the Friday gain.
It is certainly possible to mislead people with statements that may be technically true on their face but are nonetheless intentionally misleading. Those kind of statements are misrepresentations.
++++
The Trumpster Devin Nunes (R-California) and His Libel Lawyer Steven Biss:
‘It’s a great time to go out’: California Republican Devin Nunes talks about life amid the coronavirus pandemic - MarketWatch
Rep. Devin Nunes tells people to ‘go out,’ defying health experts' advice on coronavirus - The Washington Post
Devin Nunes is a republican congressman who represents the California's 22nd congressional district. This district is chock full of Trumpsters.
It’s Devin Nunes v. World when it comes to lawsuits - Roll Call
Raise your hand if you have not been sued by Devin Nunes - The Washington Post As noted in that column, Devin Nunes has taken a page out of the Trump playbook regarding the use of libel suits as bludgeon to silence critics. I would be one of the cynics who believe that Nunes "is not trying to win the lawsuits but to force his critics to pay legal fees, thereby creating a chilling effect that deters" him from criticism. That is Trump's approach; and Congressman Nunes is a 100% pure Trumpster. Donald J. Trump Is A Libel Bully But Also A Libel Loser; Why Donald Trump Has Never Won a Libel Case | Vanity Fair; Fearing Trump, American Bar Association to publish controversial report on Trump being a ‘libel bully’ - The Washington Post
Nunes uses the attorney Steven Biss to file his libel suits.
It is not surprising that Biss and Nunes have hooked up.
Biss was suspended for 1 year and a day by the Virginia State Bar based on findings that he “violated federal securities laws” and “committed deliberately wrongful acts that reflect adversely on his fitness to practice law.” Biss_11-26-08.final.pdf He also received a 30-day suspension for violating the terms of that suspension and a public reprimand for a conflict of interest.
The only effective way to stop the filing of frivolous legal actions is to impose monetary damages on the perpetrators through a court process.
One avenue would be the filing of malicious prosecution suits against both the attorney and client who initiated the frivolous action after the suit is dismissed or otherwise results in a favorable outcome for the victim. Most states allow for the award of attorney's fees as an element of damages and the lawyer filing the claim can be held liable for those damages.
I noticed that NPR has filed a Rule 11 motion against Biss which is another way to penalize his conduct. NPR Pulls Out The Big Guns: Asks For Sanctions Against Lawyer Steven Biss For Lying-Techdirt; NPR Rule 11 Motion For Sanctions (see footnote 17) I have not seen a ruling on that motion yet. I hope NPR is successful, and Biss is forced to pay substantial damages.
And this effort by Twitter to impose sanctions on Biss could succeed as well. Twitter Goes After Nunes' Lawyer for Trying to Out @DevinCow | Law & Crime
Making accurate factual statements or simply expressing an opinion will not spare a person from being sued by a libel bully.
+++++
Senator Richard Burr (R-NC) Dumped Up to $1.7 Million of Stock After Reassuring Public About Coronavirus Preparedness — ProPublica
Senate Intel chair unloaded stocks in mid-February before coronavirus rocked markets: Open Secrets.org
Sen. Richard Burr (R-NC), who sold stock before coronavirus affected market, voted against banning insider trading - The Washington Post
Burr, other senators under fire for stock sell-offs amid coronavirus pandemic: NBC
Sen. Kelly Loeffler (R-GA) Dumped Millions in Stock After Coronavirus Briefing She claims that her financial advisor did so without her knowledge.
GOP Sen. Hoeven (R-ND) bought up to $250,000 in health fund after briefing
The largest DJIA point loss in history occurred on Monday, 3/16, after Donald's Saturday tweet trumpeting the Friday gain.
It is certainly possible to mislead people with statements that may be technically true on their face but are nonetheless intentionally misleading. Those kind of statements are misrepresentations.
++++
The Trumpster Devin Nunes (R-California) and His Libel Lawyer Steven Biss:
‘It’s a great time to go out’: California Republican Devin Nunes talks about life amid the coronavirus pandemic - MarketWatch
Rep. Devin Nunes tells people to ‘go out,’ defying health experts' advice on coronavirus - The Washington Post
Devin Nunes is a republican congressman who represents the California's 22nd congressional district. This district is chock full of Trumpsters.
It’s Devin Nunes v. World when it comes to lawsuits - Roll Call
Raise your hand if you have not been sued by Devin Nunes - The Washington Post As noted in that column, Devin Nunes has taken a page out of the Trump playbook regarding the use of libel suits as bludgeon to silence critics. I would be one of the cynics who believe that Nunes "is not trying to win the lawsuits but to force his critics to pay legal fees, thereby creating a chilling effect that deters" him from criticism. That is Trump's approach; and Congressman Nunes is a 100% pure Trumpster. Donald J. Trump Is A Libel Bully But Also A Libel Loser; Why Donald Trump Has Never Won a Libel Case | Vanity Fair; Fearing Trump, American Bar Association to publish controversial report on Trump being a ‘libel bully’ - The Washington Post
Nunes uses the attorney Steven Biss to file his libel suits.
It is not surprising that Biss and Nunes have hooked up.
Biss was suspended for 1 year and a day by the Virginia State Bar based on findings that he “violated federal securities laws” and “committed deliberately wrongful acts that reflect adversely on his fitness to practice law.” Biss_11-26-08.final.pdf He also received a 30-day suspension for violating the terms of that suspension and a public reprimand for a conflict of interest.
The only effective way to stop the filing of frivolous legal actions is to impose monetary damages on the perpetrators through a court process.
One avenue would be the filing of malicious prosecution suits against both the attorney and client who initiated the frivolous action after the suit is dismissed or otherwise results in a favorable outcome for the victim. Most states allow for the award of attorney's fees as an element of damages and the lawyer filing the claim can be held liable for those damages.
I noticed that NPR has filed a Rule 11 motion against Biss which is another way to penalize his conduct. NPR Pulls Out The Big Guns: Asks For Sanctions Against Lawyer Steven Biss For Lying-Techdirt; NPR Rule 11 Motion For Sanctions (see footnote 17) I have not seen a ruling on that motion yet. I hope NPR is successful, and Biss is forced to pay substantial damages.
And this effort by Twitter to impose sanctions on Biss could succeed as well. Twitter Goes After Nunes' Lawyer for Trying to Out @DevinCow | Law & Crime
Making accurate factual statements or simply expressing an opinion will not spare a person from being sued by a libel bully.
+++++
Senator Richard Burr (R-NC) Dumped Up to $1.7 Million of Stock After Reassuring Public About Coronavirus Preparedness — ProPublica
Senate Intel chair unloaded stocks in mid-February before coronavirus rocked markets: Open Secrets.org
Sen. Richard Burr (R-NC), who sold stock before coronavirus affected market, voted against banning insider trading - The Washington Post
Burr, other senators under fire for stock sell-offs amid coronavirus pandemic: NBC
Sen. Kelly Loeffler (R-GA) Dumped Millions in Stock After Coronavirus Briefing She claims that her financial advisor did so without her knowledge.
GOP Sen. Hoeven (R-ND) bought up to $250,000 in health fund after briefing
++++++++
All trades are commission free except as otherwise noted.
The reasons for selling the highest cost lots first are (1) to reduce my income tax obligation resulting from a sell; (2) to generate a total return in excess of the dividend payments; (3) to increase my dividend yield on the remaining shares; (4) to take advantage of normal up and down volatility by selling the highest cost lots profitably and then by buying when the price falls below the lowest price paid in the chain; (5) to make it more likely that I will buy during a meltdown after selling higher cost shares (psychological); and (6) to mitigate risk through less at risk monetary exposure. Risk is also controlled through small odd lot trades.
I am not concerned about the dollar value of the profit provided I am in achieving the objectives set out above.
A. Eliminated GIS-Sold 27+ at $54.86:
Closing Price Last Friday: GIS $53.37 -$0.31 -0.58%
General Mills Inc. Interactive Charts
GIS Analyst Estimates
Profit Snapshot: +$426.37
Last Buy Discussion: Item # 5 A. Bought 2 GIS at $40.25, 2 at $39.45, 10 at $38.3 and 5 at $36.75-Used Commission Free Trades (12/29/18 Post)
GIS has held up well during the most recent carnage. I am hoping that it will correct down back to the $38 to $45 range where I would start to buy back shares.
The packaged food companies will probably have a good first half due to panic buying and hoarding. General Mills sales miss expectations, says retail orders have jumped as coronavirus outbreak spreads- MarketWatch
Dividend: Quarterly at $.49 per share/ $1.96 annually (currently frozen as GIS digests the Blue Buffalo acquisition)
Next Ex Dividend Date: 4/9/2020
Realized Gains 2017 to Date: $2,421.51 ($1,995.14 earlier trades). I have never realized a loss and currently have no position. I have never lost money on this stock.
Last Earnings Report (Q/E 2/23/20): General Mills Reports Fiscal 2020 Third-Quarter Results and Updates Full-Year Guidance
General Mills, Inc. (GIS) CEO Jeff Harmening on Q3 2020 Results - Earnings Call Transcript | Seeking Alpha
B. Eliminated Kellogg (K)-Sold 30 at $66.3:
Closing Price Last Friday: K $55.81 -$5.62 -9.15%
I did not see any specific Kellogg news that would account for the 9.15% decline last Friday. Coca Cola did make an announcement on 3/20 that costs were increasing due to the coronavirus pandemic SEC Form 8-K
I mentioned this sell in a 3/17 comment.
Quote: Kellogg Co. (K)
K | Kellogg Co. Analyst Estimates | MarketWatch
SEC Filings
2019 Annual Report
Profit Snapshot: +$333.32 (excludes 1/7/20 sell)
This 30 share lot was the last shares remaining from these two purchases. Item # 1 Bought 50 Kellogg at $55.44 and 10 at $54.68-Used Commission Free Trades (7/20/19 Post)
Last Sell Discussions: Item # 2. Pared Kellogg- Sold 10 at $69.3 (1/8/2020 Post) This posts contains a lot of cautionary charts regarding the then current stock market levels.
Item # 2.C. Sold 10 K at $66.3 (12/28/19 Post)(profit snapshot =$108.58)
Item # 3.B. Sold 10 K at $63.95 (8/10/2019 Post)(Profit snapshot =$85.08)
Dividend: Quarterly at $.57 per share ($2.29 annually)
Dividends – Kellogg Company
Last Ex Dividend: 3/2/20 I did receive this dividend.
Last Earnings Report (F/Q 12/29/19): SEC Filed Earnings Press Release
Total Profit on 60 Shares Bought in July 2019 = $525.98
Kellogg's stock has held up during the latest stock carnage period. I will consider buying back some shares when and the price falls below $55.
2. Small Ball Trades:
Small Ball Rules
A. Added 5 VTR at $46; 5 at $41.7; 5 at $38; 2 at $31.96, 3 at $29; 2 at $26.87; 2 at $ 26; 2 at $22.48; 1 at $21; 1 at $19.2; 1 at $18; 1 at 16 and 1 at $14.28 :
At the current rate of descent, VTR's stock price will be around -$30 per share before Easter.
About all that I can say about that small ball "buying program" is that I am better off using that approach rather than just buying the entire 100 share lot at $46.
The current stock price does not make sense to me, but that is the new normal for a lot of stocks.
Jefferies downgraded the stock from buy to underperform and reduced its PT from $68 to $36. I do not have access to that report.
On 3/17, Ventas announced that it had drawn down $2.75B of its $3B credit line as a "precautionary measure" Ventas Comments on COVID-19 and Provides Update on Full-Year 2020 Guidance The company also withdrew its previous guidance for 2020. The Stock Jocks do not react favorably to companies drawing down their credit lines.
The company made the following comments about its senior housing operations:
Company Website: Ventas
VTR 5 Year Chart- Yahoo Finance
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Last Buy and Sell Discussion: Item # 1.B.Sold 5 at $62.7 and 5 at $63.19 and Bought 5 at $51.6 and 5 at $49.3 (3/7/20 Post)
I discussed the last earnings report in that post. SEC Filed Press Release
Current Position: 56 Shares
Average Cost Per Share: $42.15 (timing of most small ball purchases was not optimal) Needless to say, I did not believe it was possible for this stock to go from over $60 to less than $15 in a few days.
It would be fair to say that most of my buying has not been at optimal levels based on subsequent price history.
Dividend: Quarterly at $.7925 per share ($3.17 annually)
Dividend Information | Ventas
Dividend Yield at Average Cost Per Share = 7.52%
Last Ex Dividend Date: 12/31/19
Next Ex Dividend Date: 3/31/20
The Board declared the regular quarterly dividend that reversed the dive into oblivion that was underway.
5 Year Chart as of 3/20/20:
Maximum Position: 100 Shares + shares purchased with dividends. Will consider increasing the size of purchases when the price is below $20.
Purchase Restriction: I had the small ball purchase restriction until today. I decided to change it to each subsequent purchase need only reduce my average cost per share.
Highest Cost Lot: $57.61
Lowest Cost Lot: $14.28
Prior to the commencement of the volatility event on Monday 2/24, VTR closed at $62.99 on Friday 2/21/20. The intraday low was at $13.35 (3/18/20) or -78.8% from the 2/21/20 closing price. VTR Historical Prices
C. Added 50 ARESF at US$8.44; 10 at $6.62; 10 at $5.89; 10 at 4.82:
Quotes:
USD Priced: ARESF
CAD Priced: AX-UN.TO
Company Website: Artis REIT
Portfolio Map – Artis REIT
This purchase brings me up to 330 units.
I own 230 ARESF and 100 of the units traded in Toronto and priced in CADs.
ARESF and AX.UN:TO are one and the same. ARESF is different only in that it is priced in USDs, trades on the U.S. pink sheet exchange and pays its distributions in USDs after they are converted from CADs.
The recent decline in the CAD/USD has created a Double Whammy for ARESF shares. In this context, the Double Whammy involves a decline in CAD priced shares traded in Toronto plus a decline in the CAD/USD exchange rate.
Artis is currently evaluating its strategic alternatives which could include the sale of the REIT. Artis REIT Confirms That It is in Discussions With Potential Suitors Based on current conditions and a reasonable forecast for the near future, I doubt that Artis will be able to sell itself now at an acceptable price.
Current Dividend: Monthly at C$.045 (C$.54 annually)
Artis Real Estate Investment Trust Announces Monthly Cash Distribution
Last Buy Discussion: Item # 1.A. Added 50 ARESF at US$8.86 (12/22/19 Post) I discussed the 2019 third quarter report in that post.
Last Sell Discussions: Item # 3.A. Pared Artis REIT: Sold 200 AX-UN.CA at C$12.94 (3/8/17 Post)
Item # 1 SOLD 300 AX-UN:CA at C$15.71 (9/26/14 Post)-Item # 1 Bought 300 of Artis REIT at C$14.36 (9/28/13 Post) This sell was noteworthy for a U.S. taxpayer engaged in international trading. I realized a CAD profit of C$367 so I had that many more CADs that when I bought 300 units at C$14.36. The USD profit reported on my 1099 was $6.92 and I paid an income tax on that $6.92. The tax reporting requires the conversion of the CAD cost and CAD proceeds into USDs when the transactions are made. The lower USD profit is due to the decline in the CAD/USD exchange rate from the purchase date to the sell date.
Say I bought 100 shares of a Canada stock at C$10 when the CAD/USD exchange rate was .8 and and then sold the shares at C$12 when the CAD/USD had fallen to .75.
USD Cost Basis = $8 (C$10 x. .8)
USD Proceeds = $9 (C$12 x. .75)
CAD Profit: C$200
USD 1009 Profit: US$100
The tax reporting calculation does not multiply the C$200 profit by the then current exchange rate (or US$160 reportable profit)
Last Earnings Report (Q/E 12/31/20): Artis Real Estate Investment Trust Releases 2019 Annual Results
Artis has been selling properties which accounts for the 2019 4th quarter revenue decline Y-O-Y.
Net Asset Value Per Share 12/31/19 =C$15.56
"Occupancy at December 31, 2019, was 91.5% (93.4% including commitments on vacant space) compared to 92.1% at December 31, 2018, excluding properties held for redevelopment and new development projects. Weighted-average rental rate on renewals that commenced during 2019 increased 5.6%."
"Increased unencumbered assets to $2.0 billion at December 31, 2019, compared to $1.8 billion at December 31, 2018."
"During 2019, Artis reduced "the Calgary office segment, on a proforma basis adjusted for dispositions in January and February 2020, to 2.1% of total Property NOI for the quarter ended December 31, 2019."
During 2019, Artis completed "the development of five U.S. industrial properties comprising a total of 1.5 million square feet, the majority of which were substantially leased upon completion."
D. Added 10 IGR at $7.19; 20 at $6.93; 5 at $5.88; 20 at $5.62 5 at $5.25; 10 at $5.06 and 5 at $4.51:
Quote: IGR | CBRE Clarion Global Real Estate Income Fund Overview
SEC Filings
Last Shareholder Report: Period Ending 12/31/2019
Last Sell Discussions: Item # 1.C. Sold 9 IGR at $8.33 (2/19/20 Post)(sold shares bought with dividends); Item # 2.A. Sold 100 IGR at $8.01 (12/28/19 Post)
Last Buy Discussions: Item # 1 Bought 200 IGR at $7.58 (6/29/19 Post); Item # 1 Bought 100 IGR at $7.65 (8/3/19 Post)
Data Date of Trade (3/2/20):
Closing Net Asset Value Per Share = $8.42
Closing Market Price: $7.52
Discount at $7.52: -10.69%
Data Date of Trade (3/10/20):
Closing Net Asset Value Per Share = $8.01
Closing Market Price: $7.03
Discount at - 12.23%
Data Date of Trade (3/12/20)
Closing Net Asset Value Per Share: $7.6
Closing Market Price: $5.81
Discount at -13.42%
Data Date of 3/13/20 Trade:
Closing Net Asset Value Per Share: $7.05
Closing Market Price: $5.99
Discount: -15.04%
Data Date of 3/16/20 Trade:
Closing Net Asset Value Per Share: $5.93
Closing Market Price: $5.11
Discount: -13.03%
Data Date of 3/17/2020 Trade:
Closing Net Asset Value Per Share: $6.06
Closing Market Price: $4.99
Discount: -17.66%
Data Date of 3/18/20 Trade:
Closing Net Asset Value Per Share: $5.24
Closing Market Price: $3.89
Discount: -25.76%
Sourced: IGR CBRE Clarion Global Real Estate- CEF Connect or Closed-End Funds
Dividend: Monthly at $.05 (supported by ROC; $.3 so classified in 2019)
Leveraged: Yes through a secured credit facility; effective leverage at 14.42% as of 1/31/20
Current Position: 190+ shares
Average Cost Per Share: $6.61
Dividend Yield at $6.61 = 9.08%
Dividend Reinvest: Yes, given the current discount to net asset value per share
Top 10 Holdings as of 1/31/20:
The fund will maintain a significant weighting in REIT equity preferred stocks in addition to common stocks. The weighting in preferred stocks was at 21.9% out of a 116% total as of 12/31/19.
Maximum Position: 500 shares
Purchase Restriction: Each purchase, other than through dividend reinvestment, must reduce my average cost per share.
E. Restarted FAX- Bought 100 at $4.18; 10 at $3.5; 20 at $3.65 20 at $3.25; 10 at $2.95; 10 at $2.7:
Quote: FAX | Aberdeen Asia-Pacific Income Fund Inc. Overview
The first purchase was in response to the ten year treasury yield falling below 1%.
Sponsor's Website: Aberdeen Asia-Pacific Income Fund, Inc.
Credit Weightings as of January 2020:
Foreign Currency Exposure: Significant (about 62+% in bonds issued by entities in Asia)
Modified Duration: 5.2 years.
Among the fund's government bond holdings the largest weightings are in Australian government bonds:
Sourced SEC Filed Shareholder Report
Leveraged at a High Cost IMO compared to a fund borrowing now at a spread to the short term Libor rate: Leverage is financed through a combination of preferred stock, a senior secured credit facility and senior secured notes. (see pages 37-39 in previously linked shareholder report)
The senior secured notes have a AAA credit rating. The first maturity is a 3.05% $100M note that matures in June 2020. Leverage cost is high for those AAA rated secured notes based on current interest rates for similarly rated notes:
I would assume that the coupon for the one maturing in June would come down some. I do not like the cost of this leverage and the interest rates spreads to the bonds purchased with that leverage. I will keep my total position to 100 shares and will not reinvest the dividends.
Data Date of Trade (3/3/20):
Closing Net Asset Value Per Share = $4.8
Closing Market Price: $4.19
Discount: -12.71%
Data Date of 3/12/20 Trade:
Closing Net Asset Value Per Share: $4.58
Closing Market Price: $3.58
Discount: -21.83%
Data Date of 3/13/20 Trade:
Closing Net Asset Value Per Share: $4.45
Closing Market Price: $2.72
Discount: -16.4%
Data Date of 3/16/20 Trade:
Closing Net Asset Value Per Share: $4.41
Closing Market Price: $3.35
Discount: -24.04%
Data Date of 3/18/20 Trade:
Closing Net Asset Value Per Share: $4.16
Closing Market Price: $2.91
Discount: -30.5%
Data Date of 3/19/20 Trade:
Closing Net Asset Value Per Share: $3.98
Closing Market Price: $3.08
Discount: -22.61%
Part of the recent net asset value per share decline has to be currency related. The USD has had a disorderly advance against the Australian Dollar and other currencies. The discount closed at -18.91% last Friday. The average 5 year discount was at 12.41%.
AUD / USD Currency Chart
Sourced From Aberdeen Asia-Pacific Income Fund Inc, CEF Connect
Dividend: Monthly at $.0275 per share ($.33 annually)
The dividend has substantial ROC support:
I like this even less than the cost of leverage compared to the yield on the assets bought with leverage.
Last Ex Dividend Date: 3/19/20
Current Position: 180 shares
Average Cost Per Share: $4.04
Dividend Yield at Average Cost Per Share = 8.17%
Dividend Reinvestment: Yes at greater than a 5% discount to net asset value per share
Goal: Harvest several monthly dividends and sell at a profit before the ROC adjustment to the cost basis.
Purchase Restriction: Each future purchase must reduce my average cost per share.
Maximum Position: Not established yet
Small Ball Rules
A. Added 5 VTR at $46; 5 at $41.7; 5 at $38; 2 at $31.96, 3 at $29; 2 at $26.87; 2 at $ 26; 2 at $22.48; 1 at $21; 1 at $19.2; 1 at $18; 1 at 16 and 1 at $14.28 :
At the current rate of descent, VTR's stock price will be around -$30 per share before Easter.
About all that I can say about that small ball "buying program" is that I am better off using that approach rather than just buying the entire 100 share lot at $46.
The current stock price does not make sense to me, but that is the new normal for a lot of stocks.
Jefferies downgraded the stock from buy to underperform and reduced its PT from $68 to $36. I do not have access to that report.
On 3/17, Ventas announced that it had drawn down $2.75B of its $3B credit line as a "precautionary measure" Ventas Comments on COVID-19 and Provides Update on Full-Year 2020 Guidance The company also withdrew its previous guidance for 2020. The Stock Jocks do not react favorably to companies drawing down their credit lines.
The company made the following comments about its senior housing operations:
"Through February 2020, the senior housing operating business has delivered results in-line with the Company’s expectations. Further, thus far in 2020 the Company has received substantially all of its NNN rent payments, as expected.
However, there are now strong indications that tours and move-ins are beginning to slow and the pandemic raises the risk of an elevated level of move-outs. The operating costs of Ventas’s partners are increasing as they respond to the COVID-19 pandemic. The Company expects these trends to accelerate. Accordingly, although it is too early to know the extent of the impact, the Company is withdrawing its previously provided 2020 financial guidance."
I am interpreting the foregoing statements that the damage is limited to the senior housing segment of VTR's operations and does not extend to its Health Systems (e.g. hospitals); Medical Office / Outpatient; Research & Innovation Centers; and Post-Acute Care property portfolios.
Ventas sees slowdown in move-ins to senior centers amid coronavirus pandemic - Reuters
Quote: Ventas Inc. (VTR)Ventas sees slowdown in move-ins to senior centers amid coronavirus pandemic - Reuters
Company Website: Ventas
VTR 5 Year Chart- Yahoo Finance
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Last Buy and Sell Discussion: Item # 1.B.Sold 5 at $62.7 and 5 at $63.19 and Bought 5 at $51.6 and 5 at $49.3 (3/7/20 Post)
I discussed the last earnings report in that post. SEC Filed Press Release
Current Position: 56 Shares
Average Cost Per Share: $42.15 (timing of most small ball purchases was not optimal) Needless to say, I did not believe it was possible for this stock to go from over $60 to less than $15 in a few days.
It would be fair to say that most of my buying has not been at optimal levels based on subsequent price history.
Dividend: Quarterly at $.7925 per share ($3.17 annually)
Dividend Information | Ventas
Dividend Yield at Average Cost Per Share = 7.52%
Last Ex Dividend Date: 12/31/19
Next Ex Dividend Date: 3/31/20
The Board declared the regular quarterly dividend that reversed the dive into oblivion that was underway.
5 Year Chart as of 3/20/20:
Purchase Restriction: I had the small ball purchase restriction until today. I decided to change it to each subsequent purchase need only reduce my average cost per share.
Highest Cost Lot: $57.61
Lowest Cost Lot: $14.28
Prior to the commencement of the volatility event on Monday 2/24, VTR closed at $62.99 on Friday 2/21/20. The intraday low was at $13.35 (3/18/20) or -78.8% from the 2/21/20 closing price. VTR Historical Prices
C. Added 50 ARESF at US$8.44; 10 at $6.62; 10 at $5.89; 10 at 4.82:
Quotes:
USD Priced: ARESF
CAD Priced: AX-UN.TO
Company Website: Artis REIT
Portfolio Map – Artis REIT
This purchase brings me up to 330 units.
I own 230 ARESF and 100 of the units traded in Toronto and priced in CADs.
ARESF and AX.UN:TO are one and the same. ARESF is different only in that it is priced in USDs, trades on the U.S. pink sheet exchange and pays its distributions in USDs after they are converted from CADs.
The recent decline in the CAD/USD has created a Double Whammy for ARESF shares. In this context, the Double Whammy involves a decline in CAD priced shares traded in Toronto plus a decline in the CAD/USD exchange rate.
Artis is currently evaluating its strategic alternatives which could include the sale of the REIT. Artis REIT Confirms That It is in Discussions With Potential Suitors Based on current conditions and a reasonable forecast for the near future, I doubt that Artis will be able to sell itself now at an acceptable price.
Current Dividend: Monthly at C$.045 (C$.54 annually)
Artis Real Estate Investment Trust Announces Monthly Cash Distribution
Last Buy Discussion: Item # 1.A. Added 50 ARESF at US$8.86 (12/22/19 Post) I discussed the 2019 third quarter report in that post.
Last Sell Discussions: Item # 3.A. Pared Artis REIT: Sold 200 AX-UN.CA at C$12.94 (3/8/17 Post)
Item # 1 SOLD 300 AX-UN:CA at C$15.71 (9/26/14 Post)-Item # 1 Bought 300 of Artis REIT at C$14.36 (9/28/13 Post) This sell was noteworthy for a U.S. taxpayer engaged in international trading. I realized a CAD profit of C$367 so I had that many more CADs that when I bought 300 units at C$14.36. The USD profit reported on my 1099 was $6.92 and I paid an income tax on that $6.92. The tax reporting requires the conversion of the CAD cost and CAD proceeds into USDs when the transactions are made. The lower USD profit is due to the decline in the CAD/USD exchange rate from the purchase date to the sell date.
Say I bought 100 shares of a Canada stock at C$10 when the CAD/USD exchange rate was .8 and and then sold the shares at C$12 when the CAD/USD had fallen to .75.
USD Cost Basis = $8 (C$10 x. .8)
USD Proceeds = $9 (C$12 x. .75)
CAD Profit: C$200
USD 1009 Profit: US$100
The tax reporting calculation does not multiply the C$200 profit by the then current exchange rate (or US$160 reportable profit)
Last Earnings Report (Q/E 12/31/20): Artis Real Estate Investment Trust Releases 2019 Annual Results
"Occupancy at December 31, 2019, was 91.5% (93.4% including commitments on vacant space) compared to 92.1% at December 31, 2018, excluding properties held for redevelopment and new development projects. Weighted-average rental rate on renewals that commenced during 2019 increased 5.6%."
"Increased unencumbered assets to $2.0 billion at December 31, 2019, compared to $1.8 billion at December 31, 2018."
"During 2019, Artis reduced "the Calgary office segment, on a proforma basis adjusted for dispositions in January and February 2020, to 2.1% of total Property NOI for the quarter ended December 31, 2019."
During 2019, Artis completed "the development of five U.S. industrial properties comprising a total of 1.5 million square feet, the majority of which were substantially leased upon completion."
D. Added 10 IGR at $7.19; 20 at $6.93; 5 at $5.88; 20 at $5.62 5 at $5.25; 10 at $5.06 and 5 at $4.51:
Quote: IGR | CBRE Clarion Global Real Estate Income Fund Overview
SEC Filings
Last Shareholder Report: Period Ending 12/31/2019
Last Sell Discussions: Item # 1.C. Sold 9 IGR at $8.33 (2/19/20 Post)(sold shares bought with dividends); Item # 2.A. Sold 100 IGR at $8.01 (12/28/19 Post)
Last Buy Discussions: Item # 1 Bought 200 IGR at $7.58 (6/29/19 Post); Item # 1 Bought 100 IGR at $7.65 (8/3/19 Post)
Data Date of Trade (3/2/20):
Closing Net Asset Value Per Share = $8.42
Closing Market Price: $7.52
Discount at $7.52: -10.69%
Data Date of Trade (3/10/20):
Closing Net Asset Value Per Share = $8.01
Closing Market Price: $7.03
Discount at - 12.23%
Data Date of Trade (3/12/20)
Closing Net Asset Value Per Share: $7.6
Closing Market Price: $5.81
Discount at -13.42%
Data Date of 3/13/20 Trade:
Closing Net Asset Value Per Share: $7.05
Closing Market Price: $5.99
Discount: -15.04%
Data Date of 3/16/20 Trade:
Closing Net Asset Value Per Share: $5.93
Closing Market Price: $5.11
Discount: -13.03%
Data Date of 3/17/2020 Trade:
Closing Net Asset Value Per Share: $6.06
Closing Market Price: $4.99
Discount: -17.66%
Data Date of 3/18/20 Trade:
Closing Net Asset Value Per Share: $5.24
Closing Market Price: $3.89
Discount: -25.76%
Sourced: IGR CBRE Clarion Global Real Estate- CEF Connect or Closed-End Funds
Dividend: Monthly at $.05 (supported by ROC; $.3 so classified in 2019)
Leveraged: Yes through a secured credit facility; effective leverage at 14.42% as of 1/31/20
Current Position: 190+ shares
Average Cost Per Share: $6.61
Dividend Yield at $6.61 = 9.08%
Dividend Reinvest: Yes, given the current discount to net asset value per share
Top 10 Holdings as of 1/31/20:
The fund will maintain a significant weighting in REIT equity preferred stocks in addition to common stocks. The weighting in preferred stocks was at 21.9% out of a 116% total as of 12/31/19.
Maximum Position: 500 shares
Purchase Restriction: Each purchase, other than through dividend reinvestment, must reduce my average cost per share.
E. Restarted FAX- Bought 100 at $4.18; 10 at $3.5; 20 at $3.65 20 at $3.25; 10 at $2.95; 10 at $2.7:
The first purchase was in response to the ten year treasury yield falling below 1%.
Sponsor's Website: Aberdeen Asia-Pacific Income Fund, Inc.
Credit Weightings as of January 2020:
Among the fund's government bond holdings the largest weightings are in Australian government bonds:
 |
| As of 10/31/19: 37.3% out of 146.8% total |
Leveraged at a High Cost IMO compared to a fund borrowing now at a spread to the short term Libor rate: Leverage is financed through a combination of preferred stock, a senior secured credit facility and senior secured notes. (see pages 37-39 in previously linked shareholder report)
The senior secured notes have a AAA credit rating. The first maturity is a 3.05% $100M note that matures in June 2020. Leverage cost is high for those AAA rated secured notes based on current interest rates for similarly rated notes:
 |
| Senior Secured Borrowings as of 10/31/19 |
Data Date of Trade (3/3/20):
Closing Net Asset Value Per Share = $4.8
Closing Market Price: $4.19
Discount: -12.71%
Data Date of 3/12/20 Trade:
Closing Net Asset Value Per Share: $4.58
Closing Market Price: $3.58
Discount: -21.83%
Data Date of 3/13/20 Trade:
Closing Net Asset Value Per Share: $4.45
Closing Market Price: $2.72
Discount: -16.4%
Data Date of 3/16/20 Trade:
Closing Net Asset Value Per Share: $4.41
Closing Market Price: $3.35
Discount: -24.04%
Data Date of 3/18/20 Trade:
Closing Net Asset Value Per Share: $4.16
Closing Market Price: $2.91
Discount: -30.5%
Data Date of 3/19/20 Trade:
Closing Net Asset Value Per Share: $3.98
Closing Market Price: $3.08
Discount: -22.61%
Part of the recent net asset value per share decline has to be currency related. The USD has had a disorderly advance against the Australian Dollar and other currencies. The discount closed at -18.91% last Friday. The average 5 year discount was at 12.41%.
AUD / USD Currency Chart
Sourced From Aberdeen Asia-Pacific Income Fund Inc, CEF Connect
Dividend: Monthly at $.0275 per share ($.33 annually)
The dividend has substantial ROC support:
I like this even less than the cost of leverage compared to the yield on the assets bought with leverage.
Last Ex Dividend Date: 3/19/20
Current Position: 180 shares
Average Cost Per Share: $4.04
Dividend Yield at Average Cost Per Share = 8.17%
Dividend Reinvestment: Yes at greater than a 5% discount to net asset value per share
Goal: Harvest several monthly dividends and sell at a profit before the ROC adjustment to the cost basis.
Purchase Restriction: Each future purchase must reduce my average cost per share.
Maximum Position: Not established yet
F. Added 2 SAR at $22.7; 3 at $21.9; 2 at $16.2; 2 at $15.5; 1 at $14.46; 1 at $13.34; 1 at $12.58; 1 at $12; 2 at $11.26; 1 at $8.45 and 1 at $6.67 :
Quote: Saratoga Investment Corp. - A BDC
Closing Price Last Friday (3/20/20): SAR $11.86 -$1.39 -10.49%: Saratoga Investment Corp
The BDC sector is in free fall based on clearly rational and reasonable recession concerns. The question is whether the current prices already assume far more damage to them than what will actually occur. I am "betting" small sums that the prices have gone too far south based on scenarios other than a depression or severe recession lasting several quarters with a slow recovery.
Prior to the meltdown, SAR was trading near its last reported net asset value per share of $25.3. Assuming that trading at net asset value per share is appropriate and reasonable, the Stock Jocks are currently forecasting around a $13.44 per share decline in that number or around 53%. What would be required for that result to happen? My guess would be an implosion at least as serious as 2008-probably more so. Is that reasonable to predict now?
5 Year Chart as of 3/20/20:
SEC Filings
Last Filed Form 10-Q (fiscal quarter ending 11/30/19)
Basic information on the investments starts at page 5.
First Buy and Only Prior Discussion: Item # 2.A. Bought 10 at $25.1(12/4/19 Post) I discussed the earnings report for the fiscal quarter ending on 8/31/19 in that post.
Dividend: Quarterly at $.56 per share ($2.24 annually)
Current Position: 29 shares
Average Cost Per Share: $18.64
Dividend Yield at Average Cost: 12.02%
Last Ex Dividend Date: 1/23/20
Net Asset Value Per Share:
11/30/19: $25.3 Form 10-Q (p.3)
Closing Price Last Friday (3/20/20): SAR $11.86 -$1.39 -10.49%: Saratoga Investment Corp
The BDC sector is in free fall based on clearly rational and reasonable recession concerns. The question is whether the current prices already assume far more damage to them than what will actually occur. I am "betting" small sums that the prices have gone too far south based on scenarios other than a depression or severe recession lasting several quarters with a slow recovery.
Prior to the meltdown, SAR was trading near its last reported net asset value per share of $25.3. Assuming that trading at net asset value per share is appropriate and reasonable, the Stock Jocks are currently forecasting around a $13.44 per share decline in that number or around 53%. What would be required for that result to happen? My guess would be an implosion at least as serious as 2008-probably more so. Is that reasonable to predict now?
5 Year Chart as of 3/20/20:
Last Filed Form 10-Q (fiscal quarter ending 11/30/19)
Basic information on the investments starts at page 5.
First Buy and Only Prior Discussion: Item # 2.A. Bought 10 at $25.1(12/4/19 Post) I discussed the earnings report for the fiscal quarter ending on 8/31/19 in that post.
Dividend: Quarterly at $.56 per share ($2.24 annually)
Current Position: 29 shares
Average Cost Per Share: $18.64
Dividend Yield at Average Cost: 12.02%
Last Ex Dividend Date: 1/23/20
Net Asset Value Per Share:
11/30/19: $25.3 Form 10-Q (p.3)
8/31/19 : $24.47 Form 10-Q
2/28/19 : $23.62
2/28/18 : $22.96
2/28/17 : $21.97
2/29/16 : $22.06
2/28/15 : $22.70
Saratoga has an ATM stock offering program. SUPPLEMENT NO.2 to PROSPECTUS SUPPLEMENT
Last Earnings Report (Q/E 11/30/19): Saratoga Investment Corp. Announces Fiscal Third Quarter 2020 Financial Results and Quarterly Dividend of $0.56 per Share ($2.24 per Share on an Annualized Basis)
Return on Equity Last 12 Months = 17.6%
Adjusted Net Investment Income Per Share: $.61
Earnings Per Share: $1.37
Repayments includes the sale of our Censis equity that generated an $11.3 million realized gain on a $1.0 million cost basis.
Subsequent to the quarter's end, "Easy Ice, LLC and Easy Ice Masters, LLC repaid its second lien loans at par value. SAR sold its preferred equity position in a change of control transaction. "The estimated impact of the Easy Ice sale transaction, on a pro forma basis, would be to increase our existing quarter-end NAV by at least $17.0 million, or $1.51 per share, to a pro forma NAV per share as of November 30, 2019 of at least $26.81 per share." Easy Ice, LLC has been Acquired by Freeman Spogli & Co. and Management
"The overall portfolio composition consisted of 62.2% of first lien term loans, 20.8% of second lien term loans, 0.4% of unsecured term loans, 7.0% of subordinated notes in a CLO and 9.6% of common equity."
As of November, 2019, the weighted average current yield on Saratoga Investment’s total portfolio for the twelve months ended was 9.8%, which was comprised of a weighted average current yield of 10.0% on first lien term loans, 11.4% on second lien term loans, 0.0% on unsecured term loans, 14.9% on CLO subordinated notes and 2.2% on equity interests
Maximum Position: 100 Shares + Shares purchased with dividends
Purchase Restriction: Future purchase have to reduce my average cost per share.
2/28/19 : $23.62
2/28/18 : $22.96
2/28/17 : $21.97
2/29/16 : $22.06
2/28/15 : $22.70
Saratoga has an ATM stock offering program. SUPPLEMENT NO.2 to PROSPECTUS SUPPLEMENT
Last Earnings Report (Q/E 11/30/19): Saratoga Investment Corp. Announces Fiscal Third Quarter 2020 Financial Results and Quarterly Dividend of $0.56 per Share ($2.24 per Share on an Annualized Basis)
Return on Equity Last 12 Months = 17.6%
Adjusted Net Investment Income Per Share: $.61
Earnings Per Share: $1.37
Repayments includes the sale of our Censis equity that generated an $11.3 million realized gain on a $1.0 million cost basis.
Subsequent to the quarter's end, "Easy Ice, LLC and Easy Ice Masters, LLC repaid its second lien loans at par value. SAR sold its preferred equity position in a change of control transaction. "The estimated impact of the Easy Ice sale transaction, on a pro forma basis, would be to increase our existing quarter-end NAV by at least $17.0 million, or $1.51 per share, to a pro forma NAV per share as of November 30, 2019 of at least $26.81 per share." Easy Ice, LLC has been Acquired by Freeman Spogli & Co. and Management
"The overall portfolio composition consisted of 62.2% of first lien term loans, 20.8% of second lien term loans, 0.4% of unsecured term loans, 7.0% of subordinated notes in a CLO and 9.6% of common equity."
As of November, 2019, the weighted average current yield on Saratoga Investment’s total portfolio for the twelve months ended was 9.8%, which was comprised of a weighted average current yield of 10.0% on first lien term loans, 11.4% on second lien term loans, 0.0% on unsecured term loans, 14.9% on CLO subordinated notes and 2.2% on equity interests
Maximum Position: 100 Shares + Shares purchased with dividends
Purchase Restriction: Future purchase have to reduce my average cost per share.
G. Sold 1 DUK at $100.73:
Quote: Duke Energy Corp. (DUK)
DUK Analyst Estimates | MarketWatch
SEC Filings
5 Year Chart: The stock broke down last week as did other utility stocks.
Investors - Our Company - Duke Energy
Last Earnings Report: SEC Filed Press Release
Last Sell Discussion: Item # 1.C. Sold 2 DUK at $97.05 (2/16/20 Post)
I discussed the last earnings report in that post.
I sold the 1 share into a robust rally on 3/4/20, the first U.S. stock sold since the the period of 20+ VIX readings started on 2/24/20. The general idea is to buy into volatility events rather than to sell.
Closing Price 3/4/20: DUK $101.65 +6.04 +6.32%
The move was not based on anything specific relating to DUK but on a robust rally in the sector. Another utility stock that I own, Dominion Energy, rose 6.78% that day. The Southern Company (SO) rose 6.1%.
Profit Snapshot: $11.32 (excludes 2/5/20 sell)
This lot was part of a 10 share lot: Item # 5.A. Bought 10 DUK at $89.4(9/1/19 Post)
Dividend: Quarterly at $.945 per share ($3.79 annually)
Dividend Information- Duke Energy
Last Ex Dividend: 2/13/20
Last Buy Discussions: Item # 2.A. Bought 2 DUK at $86.55 (12/7/19 Post); Item # 3.A. Bought 2 DUK at $87.94 and 3 at $87.65 (11/16/19 Post)
(H) Bought Back Shares of DUK Sold: 1 DUK at $85, 1 at $82 1 1at $81; 1 at $71:
Current Position: 18 Shares
Maximum Position: 30 shares + shares bought with dividends
Purchase Restriction: Small Ball Rule
The previous low price was the 2 share buy at $86.55. When the price fell below that amount, I was free to buy shares and bought back the 3 shares previously sold.
Average Cost Per Share: $86.48
Dividend Yield at Average Cost: 4.38%
How do I make rational sense of the recent price decline? The rational explanation is a consensus forecast that energy demand will plummet and utilities may even be constrained in funding necessary capital expenditures.
I thought the turning point last week for electric utilities occurred last week when DUK, a higher regarded one, tapped its credit facility for $1.5B. SEC Form 8-K Drawing down credit lines is not an everyday occurrence.
I. Restarted MGC -Bought 1 at $85 and 1 at $83:
This ETF will not be included in small ball "wave buying" programs of existing positions.
Quote: MGC | Vanguard Mega Cap ETF Overview
Sponsor's Website: MGC - Vanguard Mega Cap ETF | Vanguard
Expense Ratio: .07%
Holdings: 259 as of 2/28/20
Top 10 Holdings as of 2/28/20:
Last Elimination: Item # 2.A. Sold 8 at $108.84(12/11/19 Post) I really did not get up a head of steam on MGC before deciding to eliminate it.
2. Sold 1 Ventas 3.25% 3.25% SU Maturing on 10/15/26 at 108:
Profit Snapshot: +$136.95
Item # 4.A. Bought 1 Ventas 3.25% at a Total Cost of 94.205 (2/6/19 Post)
Finra Page: Bonds Detail
Issuer: Operating partnership of Ventas Inc. (VTR)
Quote: Duke Energy Corp. (DUK)
DUK Analyst Estimates | MarketWatch
SEC Filings
5 Year Chart: The stock broke down last week as did other utility stocks.
Last Earnings Report: SEC Filed Press Release
Last Sell Discussion: Item # 1.C. Sold 2 DUK at $97.05 (2/16/20 Post)
I discussed the last earnings report in that post.
I sold the 1 share into a robust rally on 3/4/20, the first U.S. stock sold since the the period of 20+ VIX readings started on 2/24/20. The general idea is to buy into volatility events rather than to sell.
Closing Price 3/4/20: DUK $101.65 +6.04 +6.32%
The move was not based on anything specific relating to DUK but on a robust rally in the sector. Another utility stock that I own, Dominion Energy, rose 6.78% that day. The Southern Company (SO) rose 6.1%.
Profit Snapshot: $11.32 (excludes 2/5/20 sell)
Dividend: Quarterly at $.945 per share ($3.79 annually)
Dividend Information- Duke Energy
Last Ex Dividend: 2/13/20
Last Buy Discussions: Item # 2.A. Bought 2 DUK at $86.55 (12/7/19 Post); Item # 3.A. Bought 2 DUK at $87.94 and 3 at $87.65 (11/16/19 Post)
(H) Bought Back Shares of DUK Sold: 1 DUK at $85, 1 at $82 1 1at $81; 1 at $71:
Maximum Position: 30 shares + shares bought with dividends
Purchase Restriction: Small Ball Rule
The previous low price was the 2 share buy at $86.55. When the price fell below that amount, I was free to buy shares and bought back the 3 shares previously sold.
Average Cost Per Share: $86.48
Dividend Yield at Average Cost: 4.38%
How do I make rational sense of the recent price decline? The rational explanation is a consensus forecast that energy demand will plummet and utilities may even be constrained in funding necessary capital expenditures.
I thought the turning point last week for electric utilities occurred last week when DUK, a higher regarded one, tapped its credit facility for $1.5B. SEC Form 8-K Drawing down credit lines is not an everyday occurrence.
I. Restarted MGC -Bought 1 at $85 and 1 at $83:
Quote: MGC | Vanguard Mega Cap ETF Overview
Sponsor's Website: MGC - Vanguard Mega Cap ETF | Vanguard
Expense Ratio: .07%
Holdings: 259 as of 2/28/20
Top 10 Holdings as of 2/28/20:
Last Elimination: Item # 2.A. Sold 8 at $108.84(12/11/19 Post) I really did not get up a head of steam on MGC before deciding to eliminate it.
2. Sold 1 Ventas 3.25% 3.25% SU Maturing on 10/15/26 at 108:
Profit Snapshot: +$136.95
Finra Page: Bonds Detail
Issuer: Operating partnership of Ventas Inc. (VTR)
YTM at 108 = 1.908%
Proceeds at 107.9 (after $1 commission)
I did sell this bond out of credit risk concerns. I was just believed the YTM was too low for this bond, meaning that the price was too high, and consequently decided to harvest a profit now rather than holding the bond to maturity.
The Ventas bonds are now reflecting some credit risk concerns. Those concerns are minor at the moment. The 2026 bond closed last Friday at 97.32.
3. Exchange Traded Baby Bonds:
I have implemented the small ball approach to buying baby bonds ($25 par values) and equity preferred stocks. Conditions in those markets turned highly chaotic last week with a strong downside bias.
Category: Exchange Traded Bond
Sub-Category: Exchange Traded Baby Bonds
A. Bought 50 THGA at $22.51; 5 at $19.25 and 10 at $13.51:
Quote: Hanover Insurance Group Inc. 6.35% Subordinated Bonds due 2053 Overview
5 Year Chart:
Closing Price Last Friday: THGA $20.05 +$2.80 +16.23% (the price bungee jumping last week was ridiculous+)
"Subordinated" is just a disguise for what is in effect for a junior bond. Those bonds will generally be superior only to common and equity preferred stocks in the capital structure. They have claims on the issuer's assets that are junior in priority to all senior unsecured and secured debt.
Junior debt may have a provision that permits the issuer to defer interest payments. That option can only be exercised when no cash is used to buy back stock or to pay dividends to common or preferred stock shareholders. Any deferred payment will generally accrue interest on the deferred interest at the bonds coupon rate. There is generally a limit of five years on a deferral. Those provisions can be found in the prospectus for THGA.
Investment Category: Exchange Traded Baby Bonds as part of Exchange Traded Bonds
Issuer: Hanover Insurance Group Inc. (THG)
2019 Annual Report (debt discussed starting at page 98)
Last Earnings Report: The Hanover Reports Fourth Quarter Net Income and Operating Income of $2.76 and $2.01 per Diluted Share, Respectively; Full Year Net Income and Operating Income of $10.46 and $8.16 per Diluted Share, Respectively; Full Year Combined Ratio of 95.6%; Full Year Combined Ratio, Excluding Catastrophes, of 91.8%
Hanover SEC Filings
Security: Prospectus
Junior Bond: Pays Interest Quarterly
Par Value: $25
Average Cost per share: $20.87
Yield at $20.87 = 7.61%
Current Position: 65 shares
Maturity Date: 3/30/53 unless redeemed early by issuer
Callable at par at issuer's option at anytime now
Stopper Clause: Yes, see page S-15 of the prospectus (deferral can occur only after the company eliminates a cash dividend on the common shares and any equity preferred shares) Common shareholders are currently receiving quarterly dividends of $.65 per share. The Hanover Insurance Group, Inc. Declares Quarterly Dividend of $0.65 Per Common Share
Interest Deferral: Up to 5 years, accrues interest on deferred payments at the coupon rate.
Credit Ratings via Schwab:
Some Prior Sell Discussions: Item # 5.A. Eliminated THGA-Sold 60 at $25.97 (4/19/19 Post); Item # 5.A. Sold 50 THGA at $25.69-Roth IRA Account and Item 5.B. Sold 50 THGA at $25.72 (9/11/2017); Item # 4 Sold 50 THGA at $25.36
Some Prior Buy Discussions: Item 1.A. Bought 50 THGA at $24.94 and 10 at $24.13-Used Commission Free Trades (1/2/19 Post); South Gent's Comment Blog # 6: Bought 50 THGA in Roth IRA at $24.7; South Gent's Comment Blog # 6: Bought 50 THGA at $24..87; Item # 3 Roth IRA: Bought 50 THGA at $21.58 (11/6/13 Post)
THGA Trading Profits = $329.65 I have the incorrect number when making a comment about this purchase. It did not include the profit realized in 2019.
Moody's upgraded the senior unsecured debt to Baa2 in April 2019. I own 2 Hanover 4.5% senior unsecured bonds maturing in 2026.
I would generally expect the junior bond to be rated at least 1 notch lower which is the case for Hanover's junior bonds rated at Baa3. Item # 3 C. Bought 2 Hanover Insurance 4.5% SU Bonds Maturing on 4/15/26 at a Total Cost of 99.6 (6/7/18 Post); FINRA Bond Detail
Next Ex Interest Date: 6/12/20
B. Bought 10 OPINI at $18.45; 2 at $15.6; 3 at $14.38 :
Quote: Office Properties Income Trust 5.875% Senior Notes due 2046 Overview
Issuer: Office Properties Income Trust
Issuer Website: Office Properties Income Trust - Home
"As of December 31, 2019, our wholly owned properties were comprised of 189 properties with approximately 25.7 million rentable square feet (all square footage amounts included within this Annual Report on Form 10-K are unaudited) and we had a noncontrolling ownership interest in three properties through two unconsolidated joint ventures in which we own 51% and 50% interests. As of December 31, 2019, our properties have an undepreciated carrying value of approximately $3.5 billion and a depreciated carrying value of approximately $3.1 billion, excluding properties classified as held for sale. As of December 31, 2019, our properties were leased to 374 different tenants, with a weighted average remaining lease term (based on annualized rental income) of approximately 5.7 years. The U.S. Government is our largest tenant, representing approximately 25.0% of our annualized rental income as of December 31, 2019." quoted from page 1 of the 2019 Annual Report.
OPI SEC Filings
I dislike this REIT with considerable fervor. It used to be Government Properties Trust. Government Properties Income Trust Announces the Completion of its Merger with Select Income REIT ("After the effective time of the merger, the combined company changed its name to "Office Properties Income Trust” and effected a 1-for-4 reverse split of its outstanding common shares." As I recall there was a dividend slash as well)
Part of that dislike relates to my very low opinion of the external manager RMR
OPINI is a senior unsecured bonds. As such, it is effectively subordinated to the senior secured, usually mortgages on specific properties.
For the unsecured senior debt owner, it is important to know how many properties have no mortgage liens. It is not possible for an individual investor to estimate whether a mortgage amount on a particular property is higher or lower than the fair value.
It is also relevant to know the amounts of other senior unsecured bonds and OPI has a lot of them.
OPI has mortgage debt on 9 properties but the amount of the senior unsecured debt is a challenging number:
Average Cost: $17.26
Current Position: 15 shares
Yield at $17,26: 10.86%
Debt Ratings: Baa3 and BBB-
Scroll to Credit/Debt Ratings at Office Properties Income Trust
Bond Prospectus (covenants start at page S-7)
Par Value: $25
Maturity: 5/1/2046
Optional Call Date: On or after 5/26/21 at par plus accrued an unpaid interest
Interest Payments: Quarterly
Next Ex Interest Date: 5/14/20
Office Properties Income Trust Announces the Sale of Two Properties for $42.1 Million
C. Bought 10 DDT at $21.61; 2 at $19.31; 1 at $14.08 and 1 at $13.34:
Average Cost: $20.1
Current Position: 14 shares
Yield at Average Cost = 9.33%
This is a nibble, of course, on a junk rated baby bond.
Quote: Dillard's Capital Trust I 7.5% Overview
During the Near Depression period, I bought 50 at $5.82. Item # 4 (3/18/2009 Post) I viewed this junior bond as scary then, an opinion shared by those who were selling this $25 par value bond at less than $6.
My last position was sold at at $22: Item # 10 Sold 50 DDT at 22 (4/15/10 Post)-Bought 50 DDT at 18.42 (2/20/2010 Post)(then rated at CCC- by S & P). I have not owned this one since that last sell until I bought 10 shares on 3/23/20.
5 Year Chart:
Issuer: Dillard's Inc. (DDS)-DEPARTMENT STORES
DDS | Dillard's Inc. Analyst Estimates
Dillard’s, Inc. Reports Fourth Quarter and Fiscal Year Results
America’s Retailers Start Crowd Control as Virus Spreads - Bloomberg
Security:
Prospectus
Par Value: $25
Main Category: Exchange Traded Bonds
Sub-Category: Trust Preferred Securities
Coupon: 7.5% paid on a $25 par value
Interest Payments: Quarterly
Maximum Position: 50 Shares
Purchase Restriction: Small purchases only that reduce my average cost per share.
Next Ex Interest Date: 4/15/20
Trades Flat: Whoever owns the bond on the ex interest date receives the interest payment
Status in Capital Structure: Junior bond, similar to TPVG in the right to defer interest payments.
Maturity: 8/1/2038
I reviewed the last Moody's report which was dated 5/22/19. In the report, Moody's assigned a Baa3 rating to the senior unsecured debt and a Ba1 to this junior bond. I would not question the junk rating for DDS. Quantumonline has the S & P rating at "B". DDT Search Results - QuantumOnline.com (registration is required to use that site) This security was originally issued in 1998.
Credit Ratings via Schwab:
I have no reason to question those ratings.
4. Short Term Investment Grade Corporate Bonds as an Alternative to Treasury Bills and Money Market Funds:
In recent days, the corporate bond market has been in disarray, causing prices to significantly decline. The decline is due IMO to increased credit risk concerns and a lack of liquidity.
The bond price declines have extended into investment grade corporate bonds that mature within 1 year. I am buying those bonds as an alternative to short term treasury bills that currently have yields very close to zero.
I am taking on more credit risk but view that risk to be immaterial given the credit quality of the issuers and the short time frame to maturity.
This warnings appeared on Fidelity's main bond page on 3/19/20:
A. Bought 2 Dominion Energy 2.579% Junior Bonds Maturing on 7/1/2020:
FINRA Page: Bond Detail
Prospectus (no early redemption right, page S-8)
I now own 7 bonds (6 in this Fidelity account and 1 in my IB account where I am no longer buying bonds)
Issuer: Dominion Energy Inc. (D)-Large Electric and Gas Utility Holding Company
Investor Relations | Dominion Energy
SEC Filings
2019 Annual Report
Last Bond Sell-March 2020 Prospectus
Credit Quality of Junior Bond:
Bought at 99.5
Cost at 99.6
YTM at Total Cost= 3.998%
Principal Outstanding: $1B
Last week, Dominion sold $750M in unsecured senior bonds. Prospectus The prospectus indicates that the proceeds will be used to redeem short term debt including commercial paper (page S-11). I interpret the commercial paper comment to indicate a concern that the commercial paper financing option may seize up. The company increased the size of its revolving credit facility last week: SEC Form 8-K
This brings me up to 3 bonds.
The other bond was bought on 2/13/17.
Bought at a TC of 99.3
Credit Quality:
5. Equity Preferred Floating Rate Preferred Stocks:
A. Bought 100 MSPRA at $16.57 and sold 90 at $17.5:
Proceeds at 107.9 (after $1 commission)
I did sell this bond out of credit risk concerns. I was just believed the YTM was too low for this bond, meaning that the price was too high, and consequently decided to harvest a profit now rather than holding the bond to maturity.
The Ventas bonds are now reflecting some credit risk concerns. Those concerns are minor at the moment. The 2026 bond closed last Friday at 97.32.
3. Exchange Traded Baby Bonds:
I have implemented the small ball approach to buying baby bonds ($25 par values) and equity preferred stocks. Conditions in those markets turned highly chaotic last week with a strong downside bias.
Category: Exchange Traded Bond
Sub-Category: Exchange Traded Baby Bonds
A. Bought 50 THGA at $22.51; 5 at $19.25 and 10 at $13.51:
Quote: Hanover Insurance Group Inc. 6.35% Subordinated Bonds due 2053 Overview
5 Year Chart:
"Subordinated" is just a disguise for what is in effect for a junior bond. Those bonds will generally be superior only to common and equity preferred stocks in the capital structure. They have claims on the issuer's assets that are junior in priority to all senior unsecured and secured debt.
Junior debt may have a provision that permits the issuer to defer interest payments. That option can only be exercised when no cash is used to buy back stock or to pay dividends to common or preferred stock shareholders. Any deferred payment will generally accrue interest on the deferred interest at the bonds coupon rate. There is generally a limit of five years on a deferral. Those provisions can be found in the prospectus for THGA.
Investment Category: Exchange Traded Baby Bonds as part of Exchange Traded Bonds
Issuer: Hanover Insurance Group Inc. (THG)
2019 Annual Report (debt discussed starting at page 98)
Last Earnings Report: The Hanover Reports Fourth Quarter Net Income and Operating Income of $2.76 and $2.01 per Diluted Share, Respectively; Full Year Net Income and Operating Income of $10.46 and $8.16 per Diluted Share, Respectively; Full Year Combined Ratio of 95.6%; Full Year Combined Ratio, Excluding Catastrophes, of 91.8%
Hanover SEC Filings
Security: Prospectus
Junior Bond: Pays Interest Quarterly
Par Value: $25
Average Cost per share: $20.87
Yield at $20.87 = 7.61%
Current Position: 65 shares
Maturity Date: 3/30/53 unless redeemed early by issuer
Callable at par at issuer's option at anytime now
Stopper Clause: Yes, see page S-15 of the prospectus (deferral can occur only after the company eliminates a cash dividend on the common shares and any equity preferred shares) Common shareholders are currently receiving quarterly dividends of $.65 per share. The Hanover Insurance Group, Inc. Declares Quarterly Dividend of $0.65 Per Common Share
Interest Deferral: Up to 5 years, accrues interest on deferred payments at the coupon rate.
Credit Ratings via Schwab:
Some Prior Buy Discussions: Item 1.A. Bought 50 THGA at $24.94 and 10 at $24.13-Used Commission Free Trades (1/2/19 Post); South Gent's Comment Blog # 6: Bought 50 THGA in Roth IRA at $24.7; South Gent's Comment Blog # 6: Bought 50 THGA at $24..87; Item # 3 Roth IRA: Bought 50 THGA at $21.58 (11/6/13 Post)
THGA Trading Profits = $329.65 I have the incorrect number when making a comment about this purchase. It did not include the profit realized in 2019.
Moody's upgraded the senior unsecured debt to Baa2 in April 2019. I own 2 Hanover 4.5% senior unsecured bonds maturing in 2026.
I would generally expect the junior bond to be rated at least 1 notch lower which is the case for Hanover's junior bonds rated at Baa3. Item # 3 C. Bought 2 Hanover Insurance 4.5% SU Bonds Maturing on 4/15/26 at a Total Cost of 99.6 (6/7/18 Post); FINRA Bond Detail
Next Ex Interest Date: 6/12/20
B. Bought 10 OPINI at $18.45; 2 at $15.6; 3 at $14.38 :
 |
| Note the limit and fill prices |
Issuer: Office Properties Income Trust
Issuer Website: Office Properties Income Trust - Home
"As of December 31, 2019, our wholly owned properties were comprised of 189 properties with approximately 25.7 million rentable square feet (all square footage amounts included within this Annual Report on Form 10-K are unaudited) and we had a noncontrolling ownership interest in three properties through two unconsolidated joint ventures in which we own 51% and 50% interests. As of December 31, 2019, our properties have an undepreciated carrying value of approximately $3.5 billion and a depreciated carrying value of approximately $3.1 billion, excluding properties classified as held for sale. As of December 31, 2019, our properties were leased to 374 different tenants, with a weighted average remaining lease term (based on annualized rental income) of approximately 5.7 years. The U.S. Government is our largest tenant, representing approximately 25.0% of our annualized rental income as of December 31, 2019." quoted from page 1 of the 2019 Annual Report.
OPI SEC Filings
I dislike this REIT with considerable fervor. It used to be Government Properties Trust. Government Properties Income Trust Announces the Completion of its Merger with Select Income REIT ("After the effective time of the merger, the combined company changed its name to "Office Properties Income Trust” and effected a 1-for-4 reverse split of its outstanding common shares." As I recall there was a dividend slash as well)
Part of that dislike relates to my very low opinion of the external manager RMR
OPINI is a senior unsecured bonds. As such, it is effectively subordinated to the senior secured, usually mortgages on specific properties.
For the unsecured senior debt owner, it is important to know how many properties have no mortgage liens. It is not possible for an individual investor to estimate whether a mortgage amount on a particular property is higher or lower than the fair value.
It is also relevant to know the amounts of other senior unsecured bonds and OPI has a lot of them.
OPI has mortgage debt on 9 properties but the amount of the senior unsecured debt is a challenging number:
Average Cost: $17.26
Current Position: 15 shares
Yield at $17,26: 10.86%
Debt Ratings: Baa3 and BBB-
Scroll to Credit/Debt Ratings at Office Properties Income Trust
Bond Prospectus (covenants start at page S-7)
Par Value: $25
Maturity: 5/1/2046
Optional Call Date: On or after 5/26/21 at par plus accrued an unpaid interest
Interest Payments: Quarterly
Next Ex Interest Date: 5/14/20
Office Properties Income Trust Announces the Sale of Two Properties for $42.1 Million
C. Bought 10 DDT at $21.61; 2 at $19.31; 1 at $14.08 and 1 at $13.34:
Average Cost: $20.1
Current Position: 14 shares
Yield at Average Cost = 9.33%
This is a nibble, of course, on a junk rated baby bond.
Quote: Dillard's Capital Trust I 7.5% Overview
During the Near Depression period, I bought 50 at $5.82. Item # 4 (3/18/2009 Post) I viewed this junior bond as scary then, an opinion shared by those who were selling this $25 par value bond at less than $6.
My last position was sold at at $22: Item # 10 Sold 50 DDT at 22 (4/15/10 Post)-Bought 50 DDT at 18.42 (2/20/2010 Post)(then rated at CCC- by S & P). I have not owned this one since that last sell until I bought 10 shares on 3/23/20.
5 Year Chart:
Issuer: Dillard's Inc. (DDS)-DEPARTMENT STORES
DDS | Dillard's Inc. Analyst Estimates
Dillard’s, Inc. Reports Fourth Quarter and Fiscal Year Results
America’s Retailers Start Crowd Control as Virus Spreads - Bloomberg
Security:
Prospectus
Par Value: $25
Main Category: Exchange Traded Bonds
Sub-Category: Trust Preferred Securities
Coupon: 7.5% paid on a $25 par value
Interest Payments: Quarterly
Maximum Position: 50 Shares
Purchase Restriction: Small purchases only that reduce my average cost per share.
Next Ex Interest Date: 4/15/20
Trades Flat: Whoever owns the bond on the ex interest date receives the interest payment
Status in Capital Structure: Junior bond, similar to TPVG in the right to defer interest payments.
Maturity: 8/1/2038
I reviewed the last Moody's report which was dated 5/22/19. In the report, Moody's assigned a Baa3 rating to the senior unsecured debt and a Ba1 to this junior bond. I would not question the junk rating for DDS. Quantumonline has the S & P rating at "B". DDT Search Results - QuantumOnline.com (registration is required to use that site) This security was originally issued in 1998.
Credit Ratings via Schwab:
4. Short Term Investment Grade Corporate Bonds as an Alternative to Treasury Bills and Money Market Funds:
In recent days, the corporate bond market has been in disarray, causing prices to significantly decline. The decline is due IMO to increased credit risk concerns and a lack of liquidity.
The bond price declines have extended into investment grade corporate bonds that mature within 1 year. I am buying those bonds as an alternative to short term treasury bills that currently have yields very close to zero.
I am taking on more credit risk but view that risk to be immaterial given the credit quality of the issuers and the short time frame to maturity.
This warnings appeared on Fidelity's main bond page on 3/19/20:
FINRA Page: Bond Detail
Prospectus (no early redemption right, page S-8)
I now own 7 bonds (6 in this Fidelity account and 1 in my IB account where I am no longer buying bonds)
Issuer: Dominion Energy Inc. (D)-Large Electric and Gas Utility Holding Company
Investor Relations | Dominion Energy
SEC Filings
2019 Annual Report
Last Bond Sell-March 2020 Prospectus
Cost at 99.6
YTM at Total Cost= 3.998%
Principal Outstanding: $1B
Last week, Dominion sold $750M in unsecured senior bonds. Prospectus The prospectus indicates that the proceeds will be used to redeem short term debt including commercial paper (page S-11). I interpret the commercial paper comment to indicate a concern that the commercial paper financing option may seize up. The company increased the size of its revolving credit facility last week: SEC Form 8-K
B. Bought 2 Federal Realty 2.55% SU Maturing on 1/15/21:
FINRA Page: Bond Detail (prospectus linked)
This brings me up to 3 bonds.
The other bond was bought on 2/13/17.
Bought at a TC of 99.3
YTM at 99.3 = 3.42%
Website: Federal Realty Investment Trust
Credit Quality:
Optional Redemption: Subject to make whole provision before 12/15/2020, but may be redeemed at par value + accrued and unpaid interest within 1 month prior to maturity.
C. Bought 2 Abbvie 2.5% SU Bonds Maturing on 5/14/20:
 |
| Price Shown Includes $1 Per Bond Commission |
I now own 6 bonds.
On or after 4/14/20, one month prior to maturity, the issuer may redeem at par +accrued and unpaid interest. I have not seen an early redemption notice yet, but that does not mean that one has not already been given.
FINRA Page Bond Detail (prospectus linked)
Credit Ratings: (see confirmation excerpt below)
Issuer AbbVie Inc. (ABBV)
ABBV | AbbVie Inc. Analyst Estimates | MarketWatch
2019 Annual Report
Website: Our Company | AbbVie
AbbVie Reports Full-Year and Fourth-Quarter 2019 Financial Results
2019 Annual Report
Website: Our Company | AbbVie
AbbVie Reports Full-Year and Fourth-Quarter 2019 Financial Results
Bought at 99.5
Bought at a Total Cost of 99.6 (includes $1 per bond commission)
YTM at Total Cost = 5.297%
What is the likelihood that ABBV will be unable to repay the principal amount on 5/14/20? This bond will be paid off.
Yet, look at the last trade from yesterday:
Somebody needs to tell the Stock Jocks that the company is in danger of going bankrupt within 60 days, notwithstanding the $39.2B in cash it had as of 12/31/2019. ABBV
What is the likelihood that ABBV will be unable to repay the principal amount on 5/14/20? This bond will be paid off.
Yet, look at the last trade from yesterday:
 |
| 100 $1K Par Value Bonds: YTM 15.971% |
The YTM includes a profit of $8 + the 2.5% coupon until the bond matures on 5/14/20. Yield to worst is a different calculation that will depend on an early redemption within the aforementioned 1 month window.
This is what the confirmation looks like:
I paid the seller $17.52 in accrued interest. When the issuer redeems the bond, I will receive the last interest payment in its entirety. Since the $17.52 will be included in my 1099, even though the seller received it, I will adjust the Schedule B Interest Amount down by accrued interest payments made to taxable bond sellers. There will be a one line negative adjustment even though the payments were made to several sellers and for bonds purchased in 4 taxable accounts.
The last 2 bond purchase was made in February 2019. Item # 2.C. at a Total Cost of 99.5 (3/17/19 Post)
Investment Category: Advantages and Disadvantages of Equity Preferred Floating Rate Securities
It is not surprising that making 100 or so trades per day since the volatility event started on 2/24 will cause the Old Geezer's brain to short circuit and blow a fuse.
I only meant to buy 10 shares of MSPRA but ended up buying 100, so I sold 90 at a profit and kept 10 shares.
Profit Snapshot: $83.73
5 Year Chart as of 3/20/20:
5 Year Chart as of 3/20/20:
Last Elimination: Item # 3.B. Eliminated MSPRA-Sold 100 at $20.38 (5/29/19 Post)
Security: MSPRA is an equity preferred stock that pays non-cumulative and qualified dividends at the greater of 4% or .7% above the 3 month Libor rate on a $25 par value. Prospectus
Stopper Clause: Yes
Maturity: None but issuer may exercise its optional redemption right at anytime.
Stopper Clause: Yes
Maturity: None but issuer may exercise its optional redemption right at anytime.
Since I first bought this security in , the coupon has never exceeded the 4% minimum amount.
An equity preferred stock will be senior only to common stock. The prospectus does contain a standard "stopper" provision that would prevent Morgan Stanley from paying a cash dividend to the common shareholders and eliminating the MSPRA dividend. (see pages S-2 to S-3; S-14 to S-15). Once the common dividend is eliminated, there would be nothing legally that could stop MS from eliminating the MSPRA dividend until it resumed paying a cash dividend.
As a practical matter, eliminating the common and preferred dividends to save cash would probably occur on the day MS files for bankruptcy, which may never occur. It is not a good sign for an investment bank to eliminate dividends to save cash. Customers would flee in droves.
If MS declared bankruptcy, this security would become worthless.
The libor rates are likely to be gone by 2021 and replaced by something else. There was price fixing committed by the Masters of Disaster that placed that rate setting practice in disrepute. There is an alternate rate setting mechanism described in the prospectus.
As a practical matter, eliminating the common and preferred dividends to save cash would probably occur on the day MS files for bankruptcy, which may never occur. It is not a good sign for an investment bank to eliminate dividends to save cash. Customers would flee in droves.
If MS declared bankruptcy, this security would become worthless.
The libor rates are likely to be gone by 2021 and replaced by something else. There was price fixing committed by the Masters of Disaster that placed that rate setting practice in disrepute. There is an alternate rate setting mechanism described in the prospectus.
MSPRA Trading Profits to Date: $2,261.74 (2,178.01 in prior trades)
Other Trade Discussions: Item # 1 Bought 100 MSPRA at $12.88 (5/26/2009 Post)-Item # 4 Sold 100 MSPRA at $21.43 (1/22/2010 Post)
Snapshot of trading profits can be found in my Gateway Post for this niche income category: Advantages and Disadvantages of Equity Preferred Floating Rate Securities
Other Trade Discussions: Item # 1 Bought 100 MSPRA at $12.88 (5/26/2009 Post)-Item # 4 Sold 100 MSPRA at $21.43 (1/22/2010 Post)
Snapshot of trading profits can be found in my Gateway Post for this niche income category: Advantages and Disadvantages of Equity Preferred Floating Rate Securities
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.
