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11/23/2024
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Marathon Oil MRO Earnings Call transcript, 8/4/22
“…returning cash to shareholders…remains our top priority…”
“And the variable dividend idea is something we — it’s a tool in the toolkit. But given what I have said about how compelling share repurchases are to us right now, it’s going to just be on the back bench.”
“Here they talked of cash returns.
Here it was they lit the flame.
Here they sang about tomorrow.
And tomorrow never came.”
Continue for Sinema?
Oh my constituents forgive me
That your buybacks now are gone
“Carried Interest” can’t be spoken
But the tax goes on and on
Nothing like discouraging capital efficiency. Now instead of good stock returns driven by buybacks when prices are low, they want the companies’ stock price to languish while they waste their money on higher taxes, higher wages, hoarding cash for questionable M&A, etc. stakeholder capitalism sounds bankrupt to me.
https://ca.movies.yahoo.com/democrats-drop-carried-interest-change-024452088.html
Totally agree
EDITED BY TIM FOR DISALLOWED NASTY LANGUAGE
Blackstone would like to extend a sincere token of thanks to the Senator.
Seriously though folks.
Apollo, Blackstone, KRR — buy these suckers on any big pullbacks and thank me later.
Private equity is going to have a field day with this one.
She must have “friends” on the street, that do her “favors”, making her a “street” walker
Equitrans ETRN is trading up sharply after hours as the business press discovers what was obvious to any observer – ETRN’s stalled Mountain Valley pipeline is a likely beneficiary of new legislation coming out of Washington.
ETRN yields about 7.5% and has gone up 8% in the last 5 days. I understand its a C-Corp, which some may prefer.
Although the MV pipeline is nicely positioned, the project seems to have had delays and cost overruns. One of its partners took a large write off, $800 million. Also there was a report in Feb 2022 of adverse state decisions, North Carolina and Virginia, which federally greased skids may not overcome. There is a cash payment in lieu of fee relief that may reflected in upcoming deferred revenue guidance.
FWIW, I’m not advocating ETRN. (I follow other companies.) Juicy dividend, but DYODD and caveat emptor.
don’t go chasing ambulances body parts usually fall out.
Looks like this bear market rally is running into some resistance right at the S&P 500 4,000 level. I was hoping that if it could get above the 4,000 level it might make a run at 4,200. That might be wishful thinking. With many traders keeping a weary eye on the deteriorating Chinese economy, chances are not many people are willing to take long positions ahead of the weekend not wanting to guess what the unpredictable Chinese government might do. I cashed out of all but one of my common stock positions and have been adding, in small batches, to my short term prefs and BBs. What else could I do?
Signature Bank of New York (SBNY) is getting slammed today (-9%) after reporting record earnings for the second quarter. Hard to fathom what is going on with this one considering it easily beat the estimates. 🤔
https://finance.yahoo.com/news/signature-bank-reports-2022-second-090000749.html
From Barrons:
Signature Bank Beats Earnings, but Stock Plunges Anyway. Here’s Why.
By Luisa Beltran
July 19, 2022 11:33 am ET
.
Signature Bank SBNY – reported second-quarter results of $5.26 a diluted share, beating Wall Street expectations by 20 cents. But a drop in total deposits has caused shares to fall 9%.
Signature (ticker: SBNY) on Tuesday reported second-quarter net income of $339.2 million, or $5.26 diluted earnings per share, compared with $214.5 million, or $3.57 diluted earnings per share, for the same period in 2021. Signature had been expected to produce $5.06 a share, according to analysts polled by FactSet.
Signature’s stock have plunged 8.8%, to $178.92, in recent trading. The S&P 500 SPX +2.01% was up 1.9%.
The earnings beat was driven by a lower-than-anticipated provision of $4.2 million for credit losses and stronger fee income of $38 million, according to Stephens analyst Matt Breese.
However, Signature’s total deposits in the second quarter declined by $5.04 billion to $104.12 billion, driven mainly by a drop in client balances for Signature’s New York banking teams, which decreased by $2.4 billion, and its digital-asset banking team, which also fell by $2.4 billion, the statement said. This resulted in lower cash balances, which dropped by about 45% quarter over quarter, said Breese, adding that the decline was more than expected.
“Overall, we believe shares could be weak today on deposit flows, higher expenses and a smaller balance sheet,” Breese said in the note. He has an Overweight rating on Signature’s stock and a $415 target price.
Signature, of New York, is a commercial bank. It was one of the first FDIC-insured banks to launch a blockchain-based digital payments platform. Total assets rose nearly 20%, to $115.97 billion, as of June 30 compared with the same period in 2021. This represents a drop of 2% from Signature’s total assets of $118.45 billion as of Dec. 31.
On Tuesday, Signature said it would pay a cash dividend of 56 cents a share, payable on or after Aug. 12, to common shareholders of record on July 29. The bank said it would also pay a cash dividend of $12.50 a share, payable on or after Sept. 30, to preferred shareholders of record on Sept. 16.
Signature’s net interest income rose by 42%, to $649.1 million, in the second quarter. Analysts had expected $641.5 million, according to FactSet.
is that a cut in their preferred div??
they have been paying $.3125 per quarter
The SBNY sell-off seems like an extreme over reaction…even the analyst Barron’s quoted has an overweight recommendation and a much higher price target. Unless there is some additional bad news coming out of the earnings call this morning, I’d be a cautious buyer when the dust settles.
Squeamishness about the terms ‘blockchain’ and ‘digital asset’?
I don’t think that is the reason…for example another regional bank that deals in cryptocurrencies Silvergate Capital (SI) , has been on a tear since it reported earnings Tues morning…up double digits for two days straight.
I think SBNY represents pretty good value here…especially with that fat $12.50 special dividend being paid to record holders in mid-September.
Unless I am confused, that $12.50 is just a 5% coupon. There are 40 depositary shares per preferred share and the depositary shares are what you can buy as SBNYP.
$12.50/40 gives you $0.3125
I closed a trading position in SBNY on Friday, after buying the selloff that occurred when Signature Bank reported Q2 earnings two weeks ago. Total return ~14%. There may be more meat on this bone, but I’m satisfied to ring up a short term double digit gain in this volatile market.
I took a similar trading position in NYCB, which has now evolved into a longer term position with a solid 6.3% dividend yield. Fwiw, there are a number of other regional bank stocks that look promising in this rising interest rate environment, including PACW which I currently have a long trade on.
ConAgra (CAG) is expected to report tomorrow. IMHO, It will be a test of the ability of large food companies to pass through some of their rising ingredient costs. To its credit, CAG has been predicting much higher food inflation than others, like, ahem, The Fed. So far CAG has been right. Forecasts are for a +17% YTY earnings increase on a 7% revenue increase.
Nonetheless, I would not be surprised to see an earnings miss. Based on my vast field research, CAG seems to be lagging Nestle in passing through price increases. My Stouffer lasagna is up 25% at the dollar store while my CAG frozen meals seem to be perpetually on sale at the supermarket.
CAG pays a 3.5% divvy and is up 5% for the year. Nothing to write home about, but a lot better than the S&P 500 or the fancy ETF I bought. (By way of comparison, KHC pays 4% and is up 8.4% YTD. Nestle lags both.)
Just my opinion. DYODD.
Tenneco Acquisition – Interesting development this morning on the TEN acquistion by Appollo https://www.sec.gov/Archives/edgar/data/1024725/000119312522182162/d347838dex991.htm
They are following through with original plan by tendering for some of the debt necessary to be retired prior to the merger however without mention of the 2 I have been following the 5.375% due 2024 and 5% due 2026… Original language in Proxy https://www.sec.gov/Archives/edgar/data/1024725/000119312522075104/d214101dprem14a.htm#toc214101_104 is,
“Tenneco has been advised that Parent (and/or one of its affiliates) presently intends to (i) redeem or otherwise repay all of Tenneco’s 5.375% Senior Notes due 2024 and 5.00% Senior Notes due 2026 at the applicable redemption prices set forth in the indentures governing such notes plus accrued and unpaid interest up to the redemption date and (ii) make “change of control offers,” at a price of 101% of the principal amount plus accrued and unpaid interest up to the payment date, for Tenneco’s 7.875% Senior Secured Notes due 2029 and 5.125% Senior Secured Notes due 2029, in each case, in connection with, and conditioned upon the closing of, the Merger.”
Big jump in price of TEN this morning in response…. assuming they follow thru on the 5.375% due 2024 (Cusip 88037EAJ0), they should be redeemed at 100.896 upon the merger
PPL just bumped its dividend back up about 12.5% after its completion of its transition to a domestic utility. It sold its UK operations then bought a RI utility and reduced leverage. Moody’s upgraded its bond ratings on June 7.
The new $0.225 dividend is still about half of what it was in 2021. PPL is predicting divvy and earnings growth of 6-8% next 3 years. Current yield is about 3%.
Made a few bucks in the commons after it cratered little while back but haven’t looked closely since. Would be interested if it sank again to mid-20s, would be interested if they have mid/term debt that’s under water. Thanks for the reminder.
Franchise Group FRG / FRGAP is reported as the exclusive bidder for Kohls in the 60 range with the only other remaining bidder in the 50’s. The other bidders dropped out. This is the point in the post where I stop typing and begin Googling for pictures of an alligator eating a python then getting indigestion.
Isn’t Sycamore one of the bidders? If they’re successful, expect to see the company gutted…
Kohls is dealing exclusively with FRG at this point. The exclusivity period is three weeks. Sycamore was a bidder. However, FRG was a higher bidder than Sycamore so Sycamore is out of the bid process for now.
FRGAP has taken a bit of a hit in the last 5 days.
Franchise Group getting unconventional Apollo loan to buy Kohl’s
https://nypost.com/2022/06/09/franchise-group-getting-apollo-loan-to-buy-kohls-sources/
AGCO follows the increasingly popular trend of declaring a special dividend for the quarter. It also bumped its nominal regular quarterly dividend to $0.24 from $0.20.
Tenneco [TEN]
Is anyone following this cash acquisition by affiliates of Apollo Group [APO]? The all cash deal was announced on Feb 23 with APO to pay $20, a premium of over 100% vs last trades prior to the announcement…. Deal’s supposed to be able to close some time in the second half, but after the immediate response had TEN jump to 19.93, there’s been nothing but a continuous drift downward on TEN to where it sits now at 17.93, That’s more than 10% below APO’s cash bid. TEN published a preliminary Proxy Statement on March 15, so the deal is progressing and yet the stock price languishes at best… Anyone know anything about what’s going on with this deal? If yesterday’s volume was any indicator, there seems to be a buyer’s strike rather than people abandoning ship as volume was very low relative to average volume.. TEN gets $108 mil should APO bail on the deal so you would think APO has incentive to get this done so why the huge arb spread?
The language quoted below in the Preliminary Proxy dated March 15 is what actually piqued my interest in this Tenneco/Apollo deal – HOWEVER, the Preliminary states that “Tenneco Inc. intends to release definitive copies of the proxy statement to stockholders on or about March 28, 2022,” and that still hasn’t happened so there’s an apparent information vacuum surrounding this deal right now – This from p 59, https://www.sec.gov/Archives/edgar/data/1024725/000119312522075104/d214101dprem14a.htm#toc214101_104
“Tenneco has been advised that Parent (and/or one of its affiliates) presently intends to (i) redeem or otherwise repay all of Tenneco’s 5.375% Senior Notes due 2024 and 5.00% Senior Notes due 2026 at the applicable redemption prices set forth in the indentures governing such notes plus accrued and unpaid interest up to the redemption date and (ii) make “change of control offers,” at a price of 101% of the principal amount plus accrued and unpaid interest up to the payment date, for Tenneco’s 7.875% Senior Secured Notes due 2029 and 5.125% Senior Secured Notes due 2029, in each case, in connection with, and conditioned upon the closing of, the Merger.”
Focusing in on Tenneco 5.375% senior note due 12/15/24 Cusip # 88037EJ0, there seems to have been no market reaction to either the original proposal or this language as price has been pretty steady, declining as interest rates have gone higher, tracing trades back to Feb. Right now, you can buy this bond BELOW 98 with YTM better than 6.25% for 12/15/24. If Apollo follows thru with this language and the deal closes in the second half and before 12/15/22, it will be called at 100.895… On the downside, it’s rated Caa1/B but if Apollo was confident enough to propose this deal at a 100% premium to the last stock price, then I suspect they must expect Tenneco will be around far longer than the 2 years left to maturity on this one. I’d also guess that the $108 mil TEN would receive if Apollo bails would go a long way to adding to TEN’s shelf life as a company..
I bot a small amount of the 5.375% but will wait until a definitive Proxy gets published before doing anything else on this idea. Incidentally the actual language in the Agreement and Plan of Merger addressing TEN debt is purposely more vague but imho implies as well that the expectation is that Change of Control provisions will apply to TEN’s debt on a case by case basis.
Anyone think this is the definition of picking up pennies in front of a steamroller?
Write long-end (1/19/24) in/or just out of the money covered calls on blue chip stocks >20% below their 52-wk highs (C, MMM, CLX, SBUX, QCOM, AMAT, INTC, GLW, JPM, WBA, BEN, IP, LEN, DHI, etc) and earn >10%/yr for the next two years on those positions. If they are exercised you make good $$, and if they are not assigned just write another long-term CC after the 1/19/24 expiration.
And, if you like to dabble, you can unwind the CC and sell the shares for quick profits where the stock rises (just made 2.2% on MS and 3.4% on IBM today on positions taken within the past 14 days).
Where should we post to talk about a CEF so as to not clutter up the Sand Box? Is this the best place? I’d love to know if anyone follows IHIT……. It’s a target term with 12/1/23 as the term date and 9.835 as target price to be returned…. I just bot today at 8.64… If I figure correctly, if I were to assume no dividends at all and treated this as a zero coupon bond that hits its target upon maturity,, I believe the YTM is in the range of 8.20%. Looking at its holdings they do seem to own issues with maturities matching up pretty well with its term date, so interest rate risk seems to be pretty much off the table, and their holdings seem to all hover around the BBB to BB+ range. So it sounds attractive to me as long as there’s no problem credits existing in their portfolio.. What am I missing???
Well their NAV is currently $9.04 – so no guarantee they can get close to the $9.835 target price in 19 months
Thanks for the input, Mav… I guess I have to look more into what they actually own to see if I can spot any trouble, but what’s changed in a way in the marketplace is that with the severe sell-off in all income issues, now, instead of practically every income issue declining to par as they approach maturity, there’s lots of them that will be appreciating to par, even if we’re only talking about a 19 month timeframe. Given Invesco has made an effort to match up maturities to around their target date, this could be an overlooked positive aspect of the current day price.. BTW, my YTM calculation didn’t even include any dividends and it’s presently paying .044/ month in divvies (darn TDA didn’t adjust my standing bid today for being x-div – grrrrrr), so there’s another built in cushion. I realize the dividend will decline as they approach maturity but still dividends are just added gravy to my beginning assumption… So will look into it a bit more and see how it goes… This is new territory for me but did own one similar to this (EHT) that worked out well on 7/1/21. Not including the March ’20 slide into oblivion, EHT reached the 9.22 level post March debacle and that was when it was about 14 months to maturity. It still ended up paying slightly above the target. Wish I knew what NAV was on the day late April when it was trading at 9.22
The maturity profile doesn’t look anything like you would expect if CEF Connect is correct https://www.cefconnect.com/fund/IHIT
I had a target date bulletshares fund in the past that came in short of the goal. Not by a lot, but enough to notice, so it can happen, but I think that might be more apples and oranges given the way the funds were set up.
I wonder too if the leverage doesn’t play a role here. At any rate, IHIT is not just issues maturing in 2023, or even averaging a 2023 maturity. More like 2025-2026 according to CEF Connect where it lists average maturity as 3.81 yrs. But that does not match what they show on their maturity chart with less than 1.2% of holdings maturing in the next 3 yrs and 115% (including leverage) maturing 20-30 yrs out. Someone smarter than me will have to explain that discrepancy! How does that average out to 3.81 years?
Thnx, Scott…. I’ve always thought that cefconnect is nowhere near as accurate as they ought to be as a go-to site, that it’s best to use them as a starting point then investigate the accuracy of their stats independently. I’ve violated my own rule on this one…. Guess I’ve got a long weekend coming up to see what more I can find. I’m going to start by taking a close look at https://www.sec.gov/Archives/edgar/data/1682811/000119312521319630/d249656dncsrs.htm. I think that’s where I got the impression their maturities match up pretty well with their target date.
2WR – yeah – it really comes down to seeing if you can find more detail on their holdings. I saw the same thing Scott did on CEFConnect – showing a lot of long term holdings
That is what would worry me with the NAV being where it currently is. The way your thesis of “instead of practically every income issue declining to par as they approach maturity, there’s lots of them that will be appreciating to par, even if we’re only talking about a 19 month timeframe.” comes true is if all those current holdings really mature and are redeemed / sold at or near par in the next 19 months. So its a matter of determining if the CEF connect holding breakdown is accurate or not
Mav – Did you look at that link I included – https://www.sec.gov/Archives/edgar/data/1682811/000119312521319630/d249656dncsrs.htm. That gives a much different view of the anticipated maturities of what they hold vs what you can see on cefconnect….. How they arrive at their anticipated maturities is beyond me and I’ve not yet looked for an answer however I’ll speculate that it has to do with the slicing and dicing that comes with CMBS deals and their specific holdings…. Still lots to learn for me but as per my usual impression of cefconnect, it’s much better to use them as a jumping off place for further in depth DD rather than taking their stats as gospel…
Would love to hear more if you’re into it…. I’ll share what I find as well…..
Apologies for the length of this but I promised to share – hopefully you get the idea from the summary only if you don’t want to dive into the details. The original final prospectus is found here – https://www.sec.gov/Archives/edgar/data/0001682811/000119312516776492/d125972d497.htm
In summary my first impressions on reading more about IHIT is it looks to me to be a conservatively structure, bottom up managed CEF investing in the non-conservative area of CMBS securities for the most part (see p 35). The original underwriters were Morgan Stanley, BofA and Wells Fargo Securities which I consider to be a plus. 4 of the 5 original portfolio managers are still managing this fund, another plus, which implies to me that the original assumptions for this CEF remain in place and are being properly implemented. In general their original limitation was to invest in only securities with “expected maturities” no greater than June 1, 2024 (p. 2). An open question would be to what degree “expected maturities” could possibly end up being extended by rapidly rising interest rates, thus jeopardizing final NAV.
Assuming I stay with this investment (I’m not sure how comfortable I am with CMBS investments) and given my assumption of projected YTM being 8.20% assuming a zero coupon bond (it’s actually paying .044/mth right now) and hitting 9.835 at maturity with a purchase price of 8.64, it makes sense to me to DRIP.
Here are quotes from the prospectus, with page numbers ID’d that I thought were helpful.
p. 1 The Fund will attempt to strike a balance between the two objectives, seeking to provide as high a level of current income as is consistent with the Fund’s overall credit strategy, the declining average maturity of its portfolio strategy and its objective of returning the Original NAV on or about the Termination Date. However, as the Fund approaches the Termination Date, its monthly distributions are likely to decline, and there can be no assurance that the Fund will achieve either of its investment objectives or that the Fund’s investment strategies will be successful.
p.2 In seeking to return the Original NAV on or about the Termination Date, the Fund intends to utilize various portfolio and cash flow management techniques, including setting aside a portion of its net investment income, possibly retaining gains and limiting the longest expected maturity of any holding (other than perpetual preferred securities) to no later than June 1, 2024. Perpetual preferred securities are not included in this restriction because they do not typically have a maturity date. As a result, the average maturity of the Fund’s holdings is generally expected to shorten as the Fund approaches its Termination Date, which may reduce interest rate risk over time but which may also reduce amounts otherwise available for distribution to Common Shareholders
p. 6 The Fund may invest in debt securities of any duration, and although the Fund will not be managed for duration, given the nature of the Fund’s portfolio, the Fund’s portfolio will likely have an intermediate average duration (initially expected to be approximately six years). “Duration” is a measure of the price volatility of a security as a result of changes in market rates of interest, based on the weighted average timing of a security’s expected principal and interest payments. The weighted average maturity of the Fund’s portfolio is initially expected to be approximately seven years but will decline over time as the Fund approaches the Termination Date.
p.6 The Fund will not invest in privately issued debt. For purposes of this limitation, securities issued pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and bank loans are not considered privately issued debt.
p. 6 The Fund intends, on or about the Termination Date, to cease its investment operations, liquidate its portfolio (to the extent possible), retire or redeem its leverage facilities, and distribute all its liquidated net assets to Common Shareholders of record. However, if the Board of Trustees determines it is in the best interest of the shareholders to do so, upon provision of at least 60 days’ prior written notice to shareholders, the Fund’s term may be extended, and the Termination Date deferred, for one period of up to six months by a vote of the Board of Trustees
p.16 Investments in CMBS are subject to the various risks which relate to the pool of underlying assets in which the CMBS represents an interest. CMBS may be backed by obligations (including certificates of participation in obligations) that are principally collateralized by commercial real estate loans or interests therein on properties having a multi-family or commercial use, such as shopping malls, other retail space, office buildings, industrial or warehouse properties, hotels, nursing homes and senior living centers
p.17 CMBS and MBS, including collateralized debt obligations and collateralized mortgage obligations, differ from conventional debt securities because principal is paid back over the life of the security rather than at maturity. CMBS and MBS are subject to prepayment or call risk, which is the risk that a borrower’s payments may be received earlier than expected due to changes in prepayment rates on underlying loans. Faster prepayments often happen when interest rates are falling. As a result, the Fund may reinvest these early payments at lower interest rates, thereby reducing the Fund’s income. CMBS and MBS also are subject to extension risk. An unexpected rise in interest rates could reduce the rate of prepayments and extend the life of the CMBS and MBS, causing the price of the CMBS and MBS and the Fund’s share price to fall and would make the CMBS and MBS more sensitive to interest rate changes
p.20 Interest rate risk is the risk that the debt securities in the Fund’s portfolio will decline in value because of increases in market interest rates. Generally, when market interest rates rise, the market value of such securities will fall, and vice versa. As interest rates decline, issuers of debt securities may prepay principal earlier than scheduled, forcing the Fund to reinvest in lower-yielding securities and potentially reducing the Fund’s income. As interest rates increase, slower than expected principal payments may extend the average life of securities, potentially locking in a below-market interest rate and reducing the Fund’s value.
p. 33 In seeking to return the Original NAV on or about the Termination Date, the Fund intends to utilize various portfolio and cash flow management techniques, including setting aside a portion of its net investment income, possibly retaining gains and limiting the longest expected maturity of any holding (other than perpetual preferred securities) to no later than June 1, 2024. Perpetual preferred securities are not included in this restriction because they do not typically have a maturity date. “Expected maturity” means the expected return of the majority of the bond’s principal and/or the time when a reasonable investor would expect to have the majority of the principal returned.
p.35 The Adviser employs a valuation driven investment approach grounded in a bottom-up investment selection process and a top-down portfolio construction process to derive a portfolio based upon fundamental analysis with an emphasis on liquidity, concentration and relative value (i.e., risk, liquidity and potential return of one investment relative to another). The Adviser will analyze the yield, price, duration, credit spread, prepayment risk and the risk of credit deterioration or default of its current and potential investments on a continuous basis to determine what it believes are the appropriate investments for the Fund. The Adviser’s philosophy is based on fundamental credit, collateral and structural analysis of the underlying investments and utilization of the secondary market for loans to manage risk (i.e., analyzing interest rate and credit risk among investments). Fundamental analysis involves evaluation of the macro-economy, industry, trends, management quality, collateral adequacy, and consistency of corporate cash flows. In constructing the portfolio, the Adviser focuses on liquidity, identification of relative value and continuous monitoring.
Just skimming through that it looked like things matched up with the target date really well. It would take a little pencil work to see what their final share price should be when they wind down. I am not familiar with how to read these things but some of those holdings seem to be approaching zero. Series 2012-C6, Class XA, IO is one. Not sure what happened with those.
At least CEF Connect will keep people from bidding up the share price while you investigate everything!
Maybe you’re on to something, Scott . Now if only we can get an SA author to write something while not going any deeper than cefconnect! LOL….. I’m not familiar with how to read these things either, but what do you mean some of the holdings are approaching zero? You saying you’re seeing they’re amortizing their way down to a zero amount due at their anticipated maturity? I suppose that’s possible, but still, this was set up as a target term. They have a 3% turnover rate on their portfolio according to cefconnect (not double checked anywhere yet). You would think that given part of their mandate is to attempt to return 9.835 at maturity, amortizing to zero would have been a part of their initial strategy to reach that goal when they bot this crap, wouldn’t you? They’re obviously not wheelin’ and dealin’ their way to hitting the target if they turnover the portfolio at 3% annual rate, so I’d theorize the real fly in the ointment would only be if they end up owning a troubled credit. Your guess is as good as mine, though…..
If you’re interested here’s Fitch take on current status of CMBS credits overall https://www.fitchratings.com/research/structured-finance/north-america-cmbs-rating-actions-stabilizing-vintage-deal-level-losses-published-15-04-2022?mkt_tok=NzMyLUNLSC03NjcAAAGDzTHEBAWggE3iopanduplYU0a7dsLTQcMMmQYjQVwonQnVpcopauECu8KRdh1_rNE2QZ_JEdXJid-WzlFVhWqXmZ8lFwKSe-_TY7G21hfpqKtjig
I agree with Scott. Skimming through the document you provided look like things match up with the target date pretty well. Much clearer than CEF Connect.
That said, since these are primarily mortgage backed securities, and their is no visible public market to look at, it’s beyond my paygrade to see what the final NAV will be when the fund winds down.
For those holdings that seem to be approaching zero. Series 2012-C6, Class XA, IO is one – those are Interest Only securities. Which is why I believe there is a big disparity between the principal amount and current value. While I have not personally dealt with these type of individual issues, I surmise the principal amount is the face value of the notes. And my guess is they have been sliced and diced – so what this trust has bought is just the right to future interest payments so the principal amount is irrelevant (hence the interest only designation) and that is what the value represents. But again, these are outside of my wheelhouse so that is my best guess on how they are accounting for interest only securities
I owned it in the past, sold when it was at premium, and bought a little more yesterday. As Mav says, I think what you’re missing is that there’s no guarantee they’ll be back at 9.85 NAV when it’s time to cash in…I assume we’ll get whatever the NAV is at time of settling. I bought in hopes that 1) NAV won’t continue to deteriorate (ie, interest rates will level off a bit?) and 2) I’ll still get the difference between today’s price and 12/23’s NAV, or I can sell if/when discount narrows. But if interest rates keep going up??..maybe won’t be a good buy.
I’m not sure where you saw that their holdings are of short term. According to cefconnect, almost all of their securities are very long term, so there’s still a lot of interest rate risk, if I understand correctly.
I hope this helps. I generally take much more from this site (especially from knowledgeable, experienced folks like you) than I give.
Thanks, CR. I’m not quite sure how I got the impression that what they own matches up well with term date….. I’m going to have to do more work…. and upon further dd, I’m also seeing that for all practical purposes, this is a CMBS fund. can’t say that gives me the warm fuzzies……… And as far as reaching the 9,835 term target, I’m of the opinion that it’s not really a cavalier hit or miss number. It’s one the manager for reputational reasons ought to be dedicated to hitting…. Sure there’s no guarantee, but it’s by definition the difference between a term fund and a target term one. That being said, I remember looking into a bunch of target term funds a few years back before buying EHT and thinking EHT stood out due to how well they matched up their holdings’ maturities with their term date vs others…. Maybe my first impression back then was right on. I know it included looking into IHIT at the time…. I also note that IHIT has a turnover rate of just 3% per year…
It looks like etrade allocated .290% of the cost of my T shares to my new WBD shares. Is anyone else seeing this?
My allocation was spot-on with the announcements of 24.19%.
For instance if one owned 2000 shares T then the 2000 T shares yielded 483.8 WBD shares. The 483 WBD shares would be added to the brokerage account plus cash for the fractional share.
AT&T reminder. Today is last day to sell T before spinoff of Warner. Tomorrow T can be sold at lower price as “T WI” but you still get Warner or you can sell Warner as “WBDWV” but keep T. After that you have both T and Warner.
Your timing is incorrect. T will continue to trade as T for a while. The end of the when issued period is subject to the effectiveness of the spinoff so today is not the last day.
T can be sold as T WD today not WI.
WBDWV can be sold today as well
I got my info from Motely Fool. Yes T WI is wrong. It’s T WD. I tried T WD on Vanguard and Fidelity and they don’t recognize it. WBDWV is recognized.
Looks like brokers are using different symbols. Fidelity uses T/WD for T WD.
Livy Investment Research on SA has a good description of what is happening with AT&T but from a look at the comments there is still plenty of confusion.
T (without Warner) and the new Warner Bros Discovery are up nicely today so for now more buying then selling. At 19.50 T dividend is now 4.6%. I assume many made there sell moves in previous weeks.
Just a reminder on placing protective orders:
I got lazy and placed an immediate sell limit on a purchase of a common stock aftyer buying it. I was not specific enough with my protective order. The stock gapped below my limit on the next open and never came back up. Now it had to come UP to meet by Sell Limit. (SLobs over BLiss).
I should have used a STOP (trigger) at Market or a Trailing % Stop (trigger) at Market if I really wanted out if it went down. Well it did go down and the rabbit done died, my protection did not work.
Anyway, it was a sloppy action and I got a sloppy result and still own the security with an 8% lower price. It pays a good div on the 24th March and now I will just wait to collect or manually sell if I choose. Usually, I buy and am willing to hold on conviction, or will not buy, but this volatility can be full of ‘spooky’ action. I always liked Einstein’s idea and use of ‘spooky action’ so I now cop it for describing this market.
Just a reminder to pay attention and use tools correctly. !! Preserve Capital!
PS: Tim, Site is performing wonderfully!
REGI – Renewable Energy Group being bought out by Chevron for $61.50 / share. Trading this morning at about $1 under purchase price.
Obviously the deal can fall apart, but has been approved by both boards of directors.
I mention this because there is a chance for $1 a share profit in a few months for those looking to park some short term cash.
As you probably know there are some large funds that concentrate 100% on this type of arbitrage, attempting to lock in the spreads such as you describe… MERFX and GABCX are two… Naturally they’ll have more info input than we can ever imagine having on these deals and in the aggregate, they set the spread based on liklihood and timing of the closing…. They can get it wrong, and MERFX did on some big ones last year marking their first down year in ages, but overall, it’s another way to park cash to play in this field… This one gives timing solely as 2nd half of the year so using 6 months as a target, the hope would be to make 3.2% if merger goes thru. Weigh that vs what could happen if the deal collapses (it’s up 38% because of the deal) and it becomes more obvious why there’s a reason to play this game via investing with the pros who invest across the board rather than rolling the dice on a single issue..
I missed out on about $.50 of upside by selling this morning. I already owned it before the announcement and decided to take the cash and run. I have other things in that account I want to buy more of and I was running low on funds 🙂
And if the deal falls apart and the stock crashes back down, I can just re-buy at probably close to my previous cost basis.
It closed at $61.41 today, so basically a wash at this point.
I”m looking for baby bonds and preferred issues that pay monthly. I have ARR-C that pays monthly. Any suggestions I can research? Thanks…
Sorry, posted in the wrong place…
LAND and FPI – In light of articles such as this one, I’m surprised these two are not doing better than they are… Seems like a good time to have been an investor in farmland:
https://www.prnewswire.com/news-releases/farmland-prices-rise-spurred-by-strong-commodity-prices-and-healthy-farm-income-301490564.html
Farmland prices rise, spurred by strong commodity prices and healthy farm income
News provided by
Schrader Real Estate and Auction Company
Feb 25, 2022, 09:40 ET
Share this article
VENICE, Fla., Feb. 25, 2022 /PRNewswire/ — Farmland prices are rising sharply as a result of high yields and strong commodity prices, as well as other factors, according to R.D. Schrader, president of Schrader Real Estate and Auction Company.
That was his message to landowners who packed a meeting room in Venice, Florida, for the company’s annual State of the Farmer’s Economy Update.
“A lot of things are falling into place to create one of the most positive land markets in recent years,” said Schrader. “The high yields and strong commodity prices are a powerful combination we haven’t seen in several years. In addition, many investors see the U.S. farmland market as a safe haven.”
Prices on high quality farmland have risen by up to 24 percent in some parts of the Midwest, Schrader said. “We had auctions in 13 states in 2021, and competition was the strongest we’ve seen in seven or eight years,” he added.
Steve Slonaker, a farm manager, appraiser and auction manager, pointed to factors creating challenges for those appraising farmland currently. “We’re seeing factors we’ve never seen before, including the use of Midwest farmland for wind and solar leases, pipelines, carbon wells and others. Since we have little or no history on which to base our assessments, this makes the picture more complicated for everyone buying, selling or leasing farmland,” he said.
He pointed to increased input costs, including recent innovations such as sugar on soybean plants and sulfur on corn and soybeans. However, strong commodity prices point to profitable farm operations despite the higher costs, he said.
2WR:
Maybe because LAND calculates its internal NAV of the company at only $13.80, with LAND common trading at $30.
If one accepts LAND’s calculation of its NAV, then much of the farm land appreciation you pointed out is already built into the stock price. LAND also pays a paltry dividend with a yield of only 1.8%.
https://seekingalpha.com/article/4483352-gladstone-land-no-cash-cow
GTY bot at $27 yield over 6%. Have followed for a long time and had a standing order a long time ago that never filled at $14. Always watched. Good management and REIT exposure for inflationary markups if necessary.
Replaced BTI that was taken last Friday at $45 on options assignment for $43.33. Div pays in a month.
May not be perfect on timing, but spinning plates.
Bot more BTI at $43. Will sell call options when price move up with any momentum (if) on the overallotment til assigned as I move forward.
Placed puts for more ENB and SHEL to put cash to work. Will take the shares at my strike price.
All in IRA.
Joel,
I like your strategy, In the recent past I have sold puts and calls on ENB, PM, MO, PFE, KR, SO, D and XOM to name a few. I really need to get back to doing more of that.
One of my common stock investment strategies has been to rely on hedge fund data to determine potential winner stocks and analyst price target data to determine if a margin of safety exists. (Or if stock is trading 10% below 52 week mid point).
Unless the pharmacist has changed my Zestril for cannabis some funds must have taken it on the chin in the last 3 months.
Margin:106.86% UBER Uber Technologies Inc Technology
Margin:99.22% DOCU Docusign Inc Technology
Margin:97.00% BBIO BridgeBio Pharma Inc Healthcare
Margin:93.82% ADPT Adaptive Biotechnologies Corp Healthcare
Margin:84.01% FB Meta Platforms Inc Communication Services
Margin:77.88% FATE Fate Therapeutics Inc Healthcare
Margin:75.32% PTON Peloton Interactive Inc Consumer Cyclical
Margin:61.31% MELI Mercadolibre Inc Consumer Cyclical
Margin:53.92% CRM salesforce.com, inc. Technology
Margin:53.63% PDD Pinduoduo Inc – ADR Consumer Cyclical
micah OK, I’ll admit it… I don’t understand your numbers… What does “Margin:106.86% UBER Uber Technologies Inc Technology” mean for example? Jethro Tull and I, we’re both thick as a brick I guess…
Margin means the difference between Morningstar analyst price target vs actual market price. In December last time I looked all of these figures where negative.
Obviously analysts are going to need to find pencils or a sharpener after earnings.
Way to bullish on Technology, biotech, and consumer cyclical companies.
PTEN raising dividend to .16 , if you followed the insiders and bought March of 20 you’re sitting on a 7.5% drilling play yield.
OMF raises dividend 35%
new payout of 3.80 vs 2.80 to yield 7.6%
no special dividend announced but a 1B stock buyback
current PE based on aver hours is around 5
From a current CTL (Lumen) bag holders perspective when the water recedes you see who was swimming naked.
Company offering debt consolidations is not exactly targeting Chase customers.
Will keep clutching my CTBB/CTDD shares.
I need to study up on this one. Looks like they are selling off some of their older retail businesses (20 states) to concentrate on hopefully more profitable businesses. I understand that they guided EBITDA down which caused some dividend chatter. (Mgmt did say they are targeting maintaining their divvy at $1.00/share.) Free Cash Flow post looks to be ~1.6 billion. Debt maturities looked okay to me thru 2024 with the next big bump in 2027.
I am not a fan of the common, but the Trust Preferreds look like what used to be called a “businessman’s risk.” Don’t know if I’d add with the Fed providing new opportunities every day, but not nervous about the asset sale.
Just my opinion.
Bear
FWIW, I’m very long the common for LUMN and like the management direction.
I’ve been in and out of LUMN a couple of times in the past year or so. Its a tradable stock and currently oversold. With a 10% yield and going ex-dividend soon, I’m a cautious buyer at these levels.
Utility NEE is down to the low 70’s from the the low 90’s just this month. The more recent drop from the low 80’s over the last 4 days looks related to upper management succession. I think it goes back up to the 80’s so I picked up 500 shares at $71.56. I also sold 10 Feb 18 $70 puts for $1.70. Anybody else selling options for extra income?
One worry here is that utilities are bought for income so when interest rates rise their share price tends to behave a bit like a bond.
But I played the utility options big after Covid hit and right up to the middle of last year. I figured if the lights went out then it didn’t matter where I put my money because the only currency would be bullets and alcohol.
Right now I have a bad option play on MU going. I did great last year, but had a rocky end of the year and start to this year.
NEE was bid up to the moon during the renewable frenzy.
Long term prudent investors have been taking a few chips off the table.
Reversion to the mean is one of the crewl forces of markets.
Pypl – paypal wow this is getting cheap. @ $152 22% return @ $137 24% return. S&P500 typical 10% return.
Do not know if this is the bottom but will open a small starter position tomorrow.
What are you talking about? 22% return from where? If the stock price goes back up? I don’t understand what you are basing returns off of.
Isn’t is obvious, Mark? If you just assume the stock will go up 22%, then you have an expected return of 22%!
IRR using previous company history of cash flow growth predicted 10yrs into the future vs present stock price.
HASI is down 8.5% today!
Any news?
HASI has been described on SA as a hybrid mREIT / BDC that finances renewable energy projects.
HASI’s been in a tailspin for the last month or so losing almost 30%, so it’s just another day for HASI today….. just one of those way overbought in the greenie revolution stocks that now seems to be coming back down to earth….I’ve been following it, but not buying it……
Greg–wow that one has been hammered down since Novembers high in the 64.00 area. Don’t know what is up.
HASI– maybe Brad Thomas’s article of today will shed some light on it.
RILY down 9% today…. Anyone see any news???????? All I see is maybe in sympathy with Goldman Sachs worse than expected earnings out today
RILYO is up a little.
And RILY continues down- had a feeling it might- could still go down to fill that gap-up around 65. Might add to yesterday’s buy- have done well trading this and gathering those big specials.
Well- it blew thru the 65 this morning, a just over 64 ! Seems to be turning up
for an hr in the 66+ range.
Still no real neg news-
Riley is buying m & a firm Focal Point for 175 million, which is less than 1/3 Riley’s quarterly revenue. Riley oversold? Still up a Hair from 6 months ago. Nibbling here.
So far RILY has blown through its 200 day moving average and its 50 week moving average in this sharp sell off. If it closes the week below $68.64 there’s more room to go before reaching the 20 month moving average at $54.66.
Again I need that crystal ball. RILY was below $50 last January so yes there is still room for it to drop. Notes are doing ok. RILYO only dropped dividend amount at ex-dividend Jan 12 and is up since then.
Looks like it might get to that 54 at this rate. Since SA has put a limiter on the articles I can read this month(?), I wonder if anyone is writing or discussing this.
Down about a 1/3 from the high and no news ??
Ehh.. what’s another 5%–off 34 from 91 high. Theater of the absurd with no info.
Here’s another one hard to fathom: CUBI, Customer’s Bank. It’s supposed to report earnings today and the estimated earnings they’re to report for the quarter is 2.85/share….. That’s for the quarter…. It’s down to 59 right now, down from its high in January of 76.10.
Still dropping – 55.04 low from 91.24, neg 39.7%
Next… 53.02… 45.92 oogly
No news.
So RILY bounced nicely off its 20 month moving average, briefly reaching $53.86 on Jan 28th before quickly moving higher. I was able to capture part of that move for a double digit gain, but sold my shares on declining volume to the upside. The stock looks tradable for quite some time as it moves to close above its 50 week moving average of $68.62 while also trying to stay above its declining 20 day moving average of $63.23.
CW, I don’t pay as much attention to charting probably as perhaps I should. I think it’s pretty clear that it works to a degree if for no other reason than people believing it does thereby making it self fulfilling. That being said, did you really mean to say “20 month moving average?” If so what’s the magic baked into a 20 month time period and where do you see a chart that would show that???? Questions of ignorance on my part, not criticism.
No, there’s nothing magic about the 20 month moving average, that was just the next likely technical support level for RILY after the 200 day and 50 week moving averages failed to support the stock price.
Every brokerage has online charting/technical analysis software, so it should be pretty easy for you to set up a chart for RILY with the standard 20, 50, and 200 interval moving averages included. Then just switch between daily, weekly, and monthly views to make note the levels .
Of course there is much more to charting than just watching the moving averages, but my experience has been that when a stock makes a sharp move, these basic technical levels often become goalposts that need to be reached before sustainable price reversal can occur.
Thanks, CW…. It’s ironic how I never even think to use the resources like what you are suggesting at either of my 2 online brokers….. I will give it a try to see what Fidelity or TDA can provide… Like I said, to me charting’s capabilities come solely from people belief in them as being magical…. That’s not necessarily anything bad, it means it’s something that must be kept in mind because others keep it in mind and act on it… but to be a Negative Nancy about charting – you just describe the strangeness of it when you essentially said, Ooops, the 20 day average didn’t work in identifying a bottom, the 50 didn’t work identifying a bottom, but look how accurate the 200 day indicator was in identifying a bottom. So it works because you (you collectively not your personally) end up finding one that worked once the others didn’t…. Again, not being critical… it’d be fun to have a face to face discussion about charting to learn more.
Frankly some folks take it to voodoo levels. Combined with a person who can talk out of both sides of their mouth they can spin a tale that is correct no matter which way the market goes. It is the modern day equivalent of getting your palm read or a tarot card reading. Some of the basics are so well known they often do cause reactions right up until they don’t which is often. Gamblers never mention those ones.
To put this conversation into context, I was responding to posters who were considering buying RILY when it was trading in the 70s and falling. My observation that it looked like the stock was heading to the 20 month moving average proved correct…a savings of over 20% just by waiting.
I guess whats missing here is any input from you as to an alternative trading strategy, preferably one that is predictive in nature. If you have something besides auguring financial statements, please enlighten us.
My Top Stocks for 2022 –
EOG EOG Resources Inc Energy
Everyday WTI is above $45 the printing press goes Brrrr.. Shareholder friendly dividend raises and special dividend returning cash to share holders.
MS Morgan Stanley Financial
MKTX MarketAxess Holdings Inc. Financial
Thesis is simple large dividend raises supported by cash flows. Two extremely powerful forces for stock appreciation.
BMY Bristol-Myers Squibb Co Healthcare
GILD Gilead Sciences, Inc. Healthcare
Beaten up drug manufactures that have growing cash flows and dividend raises. These could potentially continue to trade flat.
LHX L3Harris Technologies Inc Industrials
Shares many traits with LMT.
Z Zillow Real Estate
Recent closing of the iBuyer platform has caused market to re-rate company. Overall my take was they de-risked removing capital/people intense process from the company that put them at odds with their primary clients relators.
CMCSA Comcast Corporation Communications
Streaming wars are ongoing with recent disposal of assets by AT&T industry is re-rating remaining competition potentially causing a buying opportunity.
BAH Booz Allen Hamilton Holding Corporation Technology
CTSH Cognizant Technology Solutions Corp Technology
ACN Accenture Plc Technology
Contractors make the IT business go round. With businesses choosing to explore cloud and cloud like technologies these providers will become part of their ongoing expenses.
KLIC Kulicke and Soffa Industries Inc. Technology
Thesis resolves around ongoing chip shortage. Supplier of fab products within the Asian area which is growing with government supplied support.
COIN Coinbase Global Inc Technology
Thesis is simple revenue resolves around trades. Trades occur due to volatility. No greater volatility occurs anywhere else than digital coin assets. Trade costs are unregulated.
BLL Ball Corporation Consumer Discretionary
Stable container business with space aspirations. New cheap reusable rocket technology will enable more space missions creating a demand for their mission capabilities. (Aggressive buy backs and dividend raises are a secondary value proposition)
Personal account long term positions (BLL, ACN, CMCSA, MKTX, Z, CHTR)
Arbitrage Plays:
LBRDK – Holds Charter shares that are undervalued. Merger with Charter to release value.
AMBC – Mortgage insurance provider that has an outstanding claim since 2008. Claim award worth 3x asset value of entire company. Will cause immediate accreditation. (recent development is court date booked. As it’s an in person court date this could get pushed to next year due to covid).
I’ve had my eye on COIN. COIN (Coinbase Global, Inc) is an interesting company. It’s up over 5% today as NYC Mayor says he is converting his paycheck into crypto coins via Coinbase. Seems that the crypto fans think the mayor is a crypto expert. If it makes sense or not there is potential with COIN as long as cryptocurrencies remain volatile so COIN can collect there fees and as long as competition doesn’t get too bad.
Franchise Group has a qualified 7.5% preferred FRGAP, trading above par at ~7% or so. The underlying common FRG has recently been rallying, up on a big dividend increase (+67%) , upped guidance and a projected 1/3 cut in debt by 2022 year end. Yielding about 4% forward even after its recent 10% one day jump. DYODD.
Thanks Bear, took a look, think the opportunity in the commons may have left the station. In FRGAP since IPO and holding.
DCRC a SPAC is going public today with its first acquisition of Solid Power.
New symbol will be SLDP partnered with SK of Korea who is currently supplying Ford with EV batteries
Both Ford and BMW are invested in SLDP
Sometimes options get adjusted down after a special dividend. Might that be the case here?
That’s been my experience. Don’t know it’s universal.
it is. Fizz options will be adjusted to include the dividend.
Looks like I have learned something which — is odd since I had this same technique work out with no adjustment just last month with another company.
Will the adjustment come after the announcement (which has passed) or after holders become eligible to be paid on the 13th?
Judging by my purchase prices I might still come out OK, just have to do a little more trading if I want to maximize my return.
It depends on the amount of the dividend, they are not always adjusted. I have played that game as well very successfully. I do now know the rules of when they adjust vs not. I used to do that with OKE, option expiration would be on ex-div date and it was easy money. I stopped as it took too much to find.
That large of a div will probably be adjusted.