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5/4/2024
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Anyone follow CRT, Cross Timbers Royalty Trust? It is purely a holder of oil and gas royalties. I’m thinking if oil and gas keep going up, this would be a direct beneficiary. Thanks!
Want an interesting view on Am Royalties check out MNRL, decent management and focused on royalty sharing with equity. Best of the bunch in US in my opinion after researching them all. Do not own tho.
I have owned two CNs royalty companies in my “sock-drawer” only payers for a very long time: FRHLF and PREKF, that are also available on US OTC. The fun part for me recently was that the confidence in their models and management (read: no hot rods) during the last year saw a HUGE price down and some prudent divy adjustment, but they kept paying, boom, boom, boom. I added a scant averaging down in the oil nadir last year. Now they have both reasserted strongly, are way in the green for me and I expect div increases back to their previous payout…or who knows maybe more. Just stayed with the plan. They use a payout ratio which is tied to oil prices realized, true royalties. Worth a look.
Years ago, the Ontario Pension System tried to buy all of Freehold and that is when I began DD into these companies. Me love this method of their business models which need to be understood.
I actually picked up MNRL last week, glad you concur!
CRT will benefit more if oil prices rise enough to overcome their share of operational costs (and deficit) in the 75% tier TX & OK acreage. However, I like SBR and DMLP much better. I personally don’t view MNRL as a comp for any of these.
I would love to hear more about why you don’t think MNRL is a comp. I listened to the conf call and have reviewed their materials and bought some. I guess more importantly is your thought on those companies and the royalty play idea. Thanks!
One of the people I follow is Michael Burry, he of Big Short fame. Because of the size of his holding he is required to file 13Fs each quarter. I would describe him as a value-based short/medium term equity trader. He does with equities what I think a lot of people here do with fixed income.
Interesting, to me, to see what he moves in to and out of each month:
https://www.sec.gov/Archives/edgar/data/1649339/000156761921003819/xslForm13F_X01/form13fInfoTable.xml
I especially like the move into CoreCivic, as I did the same both on the debt and the common (through cash secured puts). There are lots of familiar names on the list.
The inherent limitations on the data are 1) it’s 45 days old when published, so it’s yesterday’s news, and 2) short positions are not disclosed. But still, you can get a lot of insights into the thinking and methodology of a very savvy investor.
The portfolio is concentrated enough to add some meaningful alpha but diversified enough that he isn’t crushed by one bad call. Like some of the jokers in the hedge fund business. I believe Burry is playing with his own money here.
I was hoping to put this in the UHaul section as another possible alternative investment type vehicle, but that’s closed so this is the closest I can figure to be a near relevant area for this oddity:
Every now and then I check out The Royalty Exchange just out of curiosity – https://auctions.royaltyexchange.com/overview. I was wondering whether or not anyone here has ever had any real time experience with this? It’s a site where you bid on specified future royalties to come from music or movies publishing or performanc rights, etc… I wonder if one were to win one of these, is it as simple as just sitting back and letting the royalties flow in or does one have to be proactive in marketing what you’ve bot once you’ve bot it in order to be successful… for example, right now you can bid on rights for royalties from The Doobie Bros song, “Black Water.” It’s all’s spelled out in detail, but I wonder if John Q Public, who’s not a music insider, has a prayer of getting treated fairly if he owned any of these type rights? Great cocktail party conversation starter either way though, I suppose…. Can you really be the next Paul McCartney via this route? McCartney probably makes more from the various music rights he owns under his MPL Communications umbrella company than he does from the music he’s making these days.. https://www.mplcommunications.com/
Here’s the Doobie’s info https://auctions.royaltyexchange.com/auctions/the-doobie-brothers-black-water-more/?origin=overview&filter_value=overview#Overview
Yeah, I know far far off normal topics, but maybe it’s another UHaul type thing to do in a way….. kind of fun too..
2wr – I’ve not looked at that website but there are a number of music royalty companies out there some being quite large.
Check out Round Hill Music Royalty Fund.
Thanks, Bob – I’ll take a look…….. I’m not sure my interest is beyond curiosity but it’s worth investigating… Music is such an interest of mine I might as well check out income stream avenues within…
JMP, Thank You Insider Cow for that.
Insider Cow is a web site that lists all insider buys and sells.
I have been playing stocks based on that strategy for many years.
Alas, I don’t hold for long.
I just my last shares of JMP 7:57 AM EST at 11.00 . (Bought Feb 2nd)
SPLP also has steady Insider buys, but I bought preferred instead of common and that was a mistake. I will buy the common today because I see a Cup forming and hope the handle is way higher.
Devon Energy — DVN
I’ve been on a contrary streak lately, and even though the energy sector has fallen on hard times and is not much loved these days, I think there may be some opportunities here. One such opportunity is Devon Energy. DVN has recently completed it’s merger-of-equals with WPX Energy and the combined company appears to be on solid financial footing. What I like is the fact the company reports they can break even at $33 WTI and with oil trading around the $60/barrel mark DVN has plenty of upside IMO. So much so, they just declared a variable dividend of .19/share on top of the regular, fixed .11/share dividend, both payable 03/31 to share owners as of 3/15.
Here is a link to a PowerPoint presentation outlining the company’s position and outlook.
https://s2.q4cdn.com/462548525/files/doc_presentations/2020/DVN-WPX-Strategic-Merger-of-Equals_Presentation_092820.pdf.
I invite your comments and observations.
DVN has a history of chasing trends and not having the balance sheet to take advantage.
This has allowed activist investors to take over.
I’ve been in and out of several energy producers over the years, including the shales. I’ve made money on some and lost on others. Seems the totally uncontrollable factor remains OPEC. Despite a lot of discussion of OPEC being dead or nearly so, the Saudis can open or close the spigot at any time and it will affect your investment. With oil over $60 a barrel, it’s just a matter of time before the Saudis begin pumping more. Plus, DVN has had a heck of a run in the last six months.
Any idea why CNIG is dropping so much today. Not a huge amount, but for being bought out a little surprising.
Softbank (SFTBY) is up 8% today. Was it the increase in profits or was it that Softbank and Microsoft was mentioned in the same sentence in a headline? It doesn’t take much in this market to get stocks to pop or drop.
Softbank invests in and sells new technology companies regularly. Winners exceed losers so It’s worked out in this technology growth market. Surprising to me is that it has a small dividend of about .5%. The CEO, Masayoshi Son, is an interesting guy and aggressive so I took a chance with a small investment that resulted in a 145% gain. At times there is negative press when some of its holding like Weworks has problems but those losses are covered by major profits with other companies. There’s growth potential in the investments it makes and it remains aggressive so I’ll hold and hope for the best. It’s hard to judge the value since they are constantly investing and selling.
The proxy voting instructions I received for one of my holdings allows only a “For” or “Abstain” vote for the slate of Directors. Always in the past, I have been allowed to vote “Against” nominated Directors. I’ve never seen only choices “For” and “Abstain”. This is one time when I really do want to vote against all the directors, so it pisses me off that there’s no “Against” option, and just seems typical of this crowd of criminals.
Anyone else seen this before?
Do you own enough shares for it to make a difference? If not, I’d worry about something more pressing in my life.
Also, why continue to hold shares in a firm run by what you discern to be a ‘crowd of criminals?’
JMO
Wish I had an “against” option for political elections.
Many people abstain by not casting a vote at all, and one really can’t know if these individuals are just lazy/indifferent or if they oppose management. If you actually vote “Abstain”, you are clearly opposing the Directors.
camroc, I’ve asked myself the same question and yes it’s past time to exit.
af, thanks for the thoughts.
Bob, thanks for the humour.
RSS Feed –
Just testing…. sorry but haven’t seen anything in past 3 hours…….that seems out of the ordinary.
A lull in the conversation?
Thank you all for the wonderful education that you have given me , a lurker, for quite some time. I have been on this website a lot more of late due to the pandemic, so I thought I should come out of the shadows. I wanted to make sure that I was looking at CNIG correctly, since Grid has brought it up recently and since I have made a decent sized purchase. If I were to purchase more today at $23.75, I would receive $24.75 when the deal closes in the 2nd half of 2021, plus any dividends paid during that time, correct? Seems like a no brainer. Is there a likely chance of the deal with Argo Infrastructure not happening? Is there anything else that I am missing? Thanks again to all of you for the great education!
Hey JTS, I bought a bunch of CNIGP which is the 1 preferred to 1.2 common stock convertible at $27.
That makes the redemption cash in of it worth of $29.70. Im just sitting on mine….Your not missing anything. But these tend to sit where they are at waiting for approval. The market is going to give you a small bone here until merger is complete. However, you are taking the ~30% haircut risk if it doesnt go through…For whatever reason that may come upon.
CNIG isnt going to retract as the “6 unit team” that owns well over half and is aged (along with Gabelli thrown in) already said yes over a few martini’s. But many unforeseen risks can occur thus why it sits below merger price.
I can list several easy reasons why this will go through, but the unforeseen and regulatory angst if any, I have no idea which is the key in the end. Plus it could drag out longer than planned which ultimately shaves annual return down also. …. Its now just a modified version of picking up nickels in front of a steam roller… Keep your head up when bending over!
Thanks Grid, that makes sense. I’ll sit tight with what I have and find other opportunities in the meantime.
Grid, concerning CNIGP – when merger completes, does that mean our CNIGP shares get transformed into CNIG common stock at a rate of 1.2 shares for every CNIGP held?
And if so, would we be able to sell on the open market, or will those shares be changed to those of the merging company?
No, according to filings they get cancelled and pay $29.70. Just like the common gets cancelled at its buyout price (cant remember off top of my head what it is). But they all are getting cancelled as there is nothing to convert too since a private company would be taking it over.
Thanks, so we will be getting cash of $29.70, plus any accrued dividends. Correct?
Merger is supposed to complete in second half of 2021. I will sit tight on CNIGP until then.
Yes, that is the plan…But… It involves two separate state regulatory agencies and one is NY. I dont know if their wheels are well oiled to move fast now. So these things drag out…Remember Exelon and PEPCO merger and how it dragged on and on and was cancelled and then on again? Oh and the painful part for us both…When we bailed on PEPCO the day before because it wasnt going through and PEPCO was going to drop like a rock?
We lost our investing testosterone 24 hours before pay dirt and it cost us both a 30% windfall. You have probably got over it, but it still burns my rear.
Wow, PEPCO – you did bring up a long forgotten event. Yes, it was painful at that time, but like you correctly said, I have moved on.
Sure hope that this merger will go through and be complete as they say.
JTS – Welcome to the wonderful world of low risk merger arbitrage because that’s what you’re looking at re- CNIG. Grid’s mentioned Gabelli on this one and they are big players in the field though from what Grid’s said, I think they were in CNIG before the buyout surfaced… What you’re doing is weighing the odds of the deal closing at 24.75 and/or closing on schedule and then deciding whether or not that’s worth the wait to get that price then or sell today at 23.75. That’s a pretty simple yield to hold date calculation if you throw in a guesstimate for actual closing date. Eyeballing it, I suspect a hold is a pretty good deal, especially with the risks of closing probably being quite low
BTW, true merger arbitrage would include playing with vehicles that minimize the risks of the deal falling thru.. Simplest example would be when one public company buys another, the arbitrageur would buy the company being bot and sell the shares of the issuer based on complicated proprietary formulae they create…. People like MERFX and GABCX specialize in this and in general, they offer a pretty safe bet for steady but low yields, good places nowadays to use as money market rate alternatives..
Thanks 2WR. I’ll take a look at both of those funds.
Excellent commentary imho just published by Barrons titled “GameStop Is Not a Morality Tale” https://www.barrons.com/articles/gamestop-is-not-a-morality-tale-51612195588
I’ve been hitting those points on message boards and the response is hilarious. ‘Take up the pitchforks’ …”you must be a hedge fund guy”. “You must be short”…..psst I’m a long only investor!! Without being able to understand its Institution vs Institution. The tape proves it. Just look at GME biggest shareholder starting with…..FIDELITY. Is fidelity a reddit trader with robinhood trading accounts?
The stock hit 2.50. It had 4 dollars in losses. **NEWS FLASH** kids download their fortnight games. And they have Amazon walmart and TGT as options too.
So the soundbite of the day, week, month, and year is GME. My thoughts are
1. Short squeeze has elevated their shares so high as to give them a new shot at shoring up their insolvent balance sheet
2. The only people hurt were short so who cares
3. The way margin trading acts work it’s not naked shorts that pushed the short interest over 100%…and see #2
4. The trading volume in dollars of the top 15 shorts for last 4days exceeds 200 billion, no way is the majority of that retail day trader
5. Reports that’s it’s all robin hood and retail traders are lying or actually too stupid to know (which is more dangerous!) that’s its institutional vs institutional trading
6. Doesn’t anybody care to report this fact; there may be 140% short common shares, but offset by 141% long option positions.
Shorting was first done in year 1602. This is not a new concept, and none care to even report how a cash/margin account/short margin accounts work
I had a few of stocks hit my “buy” level today (keep in mind I’m a buy and hold dividend investor).
WPC, PFE, EIX, NNN, HIW, BFS
Not a lot of dry powder at the moment though so simply noting them.
Any reason for liking EIX more than some others? I’m losing PNM this year on a “merger” which is really a buyout since we only get cash. So really looking for some good utilities to put that back into. I voted no on the merger since my purchase yields range from 8-14% so I’m trying not to chase yield to make up the loss but rather hoping to find one raising divs consistently.
My utility watchlist includes D, EVRG, and PNW. I am also looking at VZ. The “California” risk keeps me disinterested in EIX, however the additional risk does appear to be already discounted.
I strongly believe that the increased usage of EVs is an underappreciated catalyst for the electric utility sector.
RE EIX – Morningstar has a fair value of 69, pays 4.6% and has a 16 year dividend track record so checks a lot of boxes for me. I also own DUK, SO, PNW (also a buy I think).
There is the wildfire risk of course and I expect that’ s why there is a slight discount.
Bill and af,
SO has the two year converable SOLN also if you are good holding that Util even after conversion to common as a worst case scenario. Paying about 6.8% for about two years. Decent and fair conversion clause.
There are a couple other big utils, D/DCUE and I forget the other one, with similar short term converts, but understand the conversion features if the stocks are down at the time of conversion with a conversion to common and that div…if there is one.
Joel I’m gonna check SOLN thanks for the idea.
Joel – I looked into SOLN as that 6.75% yield and selling sub 50 was enticing. Looking at the charts it appears that the price of the this preferred follows the price of SO very closely. (I ran them side by side). I take this to mean that the value of the shares at conversion is affected by the value of the SO common shares at the same time.
Am I correct that one is essentially making a bet on the value of SO if you hold this to mandatory conversion? In particular, below that lower limit of $57.20 for SO share price in seems one starts to lose ground in the principle returned to you.
I am new at mandatory convertibles so this is of interest to me. Thanks for any clarification/guidance you or anyone else can provide.
Bill, You basically got it figured out. These are equity units and ultimately are just a bet on the common stock with a slight yield tease thrown in for playing.
These typically are “stall tactic” shares issued for company to grow its earnings into some type of recent or near future digestive purchase or capital expense before converting the equity dilution.
Since you are new to these, remember they will not trade independently like a preferred stock, they are in bed with and tethered largely throughout the process with the common stock.
Grid – Thanks, well appreciated. I am learning! Bill
BillW,
Having grown up in Southern Cal and now living in the North I have lived through 2 wildfires and talked to many of my customers throughout Northern and Southern Cal.
Outside the risk of Santa Ana winds I am comfortable holding SCE-PH
Look at it this way, I have no desire to hold SO because I think of the destruction from hurricanes that happen almost every year now.
So no different in my view from Calif and the wildfires.
BillW
Of your names I like WPC, PFE, NNN. I agree with af below that CA fires are concerning for EIX. That’s why I don’t hold the SCE trusts(?). With BFS I’m more comfortable holding the PFD (BFS-E).
Given where the market is, I think purchasing stock-as-bond income is best where one has lots of dry powder to continue to scale into these as they drop. And pick dividend champions, as you don’t want to continue scaling in on an equity and then have the divie cut.
Another thought if your cash is limited is just pick T, MO (if you’re okay with it), EPD or MMP at their current rate, and don’t look back. You’re getting 7-9%, and let the stock price be a concern of the estate.
WPC is the only common stock I presently own, I am using it more as a preferred stock replacement. It kind of moves around a lot frequently in a days time. So I have day traded it several times. And its a good thing I have as the trading has got my cost basis barely below present price. Without trading, I would be several bucks underwater in total, not counting the dividend. Jan 1, 2013 it was a $67 a share stock, albeit with a 66 quarterly dividend, now its still right around that price with an almost $1.05 quarterly. One can always pick their comparison price point, I get, but its more of a slow dividend growth play than anything.
Same happens with me with EPD. I buy a chunk with the intention to hold for years, but then it rises 8%, and I’m like “why wait the whole yr for the 9% divie, just take the profit now.”
But then FOMO pops up so I immediately buy a quarter lot, in case it goes up. I scale in as it drops, then it pops 7%, and it’s like “why wait for the divie”? Rinse and repeat as “someone” said.
I’m a “recovered” FX and minis trader who had to “sober up” in longer-dated senior debt for years to get my life back. So I am not looking to trade: 4-5% makes me very happy. But you hold dozens of these PFDs and quality high-yield equity positions, scan your ‘unrealized gains,’ and you’re up generously in a position – you gotta take it and buy something else. That “something else” in equities is a much smaller group – and I agree WPC is one at the current 6.30% (not a “champ” but a “contender” with 24 yrs – good enough). On the other hand there are dozens of decent holdings in the PFD sector with their sober 0.5 betas.
It’s a weirdly easy market to make money in – almost makes you feel uneasy. The Fed has a floor under this thing like never before.
Yep have T, EPD, and MMP in the mix. Long term holds for now.
My common stock portfolio is averaging 4.3% which I’m OK with. Have blue chips like JNJ, PEP, MMM Etc bringing the average down vs the above.
Lately have been buying REITS in the IRA. WPC among others.
Bought some BTI on Friday.
There is merit (no pun intended) in buying the most non ESG companies out there. All they do is make money.
Every time I see hate directed at a company or industry I look at selling puts. All those nervous holders wanting to get out! Making yourself out to be an insurance company can be profitable.
Hello Fellow Investors…
I love this site – its’ a breath of fresh air. Thank you!!
Still, I’m not a trader at heart and don’t really want to manage 20+ stocks or bonds. Nearing retirement and want to get more in the income area, and don’t mind putting some $ away in leverged income CEFs – put away and forget. Any med risks tolerance recommendations? e.g. CGO, JPS, RCS, RFI, etc…Gamestop of course! 🙂
All the best!
Ricks- Put the Flaherty & Crumrine Preferreds on the list as well. FFC and a few others. I don’t own any now but when I did I liked them over the others in the category. Great long term track record. All are too expensive now but when the market turns these get killed and a great time to buy. As long as you wait to buy and don’t get spooked by the volatility. They can be a good piece of your portfolio. I
I 2nd FFC as long as you wait for a crash to buy. These can drop 20% in the blink of an eye, that being 3 years worth of distributions. Sitting in cash to buy at 20% under present price is not bad.
PS – FFC dropped 60% in March, so such moves are possible.
Bought FFC mid April around 18. Probably buy more if it drops under 19.
Is continuing to hold it when it’s as high as it is now a bad idea after buying in the crash?
I actually own FFC and plan to get more with the next correction. Probably one of the best CEFs in my research, too. Agreed: Everything is pricey right now, and I would not buy more until we get some better prices/NAVs. I bought a lot of NOBL in March – got lucky and did well. Would do it again with a good panic (I love those times).
Thanks again – helped confirm some of my bet/strategies. Good Luck!
I like FFC and have a marker holding of only 25 shares just to keep it in front of my face to watch for buying opportunities. Monthly payout of just under 7% at current high price is good reason for me to pick up more, its rated 5-Star by Morningstar. Plan to add more when it gets closer to the 3-year prem/disc average.
RickS, you might take a look at BIF it’s got a big tilt to Berkshire Hathaway but has a dividend kicker, also a large discount to nav.
Bob,
I looked over on SA and read a article on these funds. One comment struck me as interesting, But the person didn’t provide proof
“they were all able to take advantage of drops in the short-term rate and, by virtue of being private agreements, they are out of scope of the 1940 Act asset coverage rules making them less liable for a chance of deleveraging.” Would appreciate an explanation of this why / how they were able to avoid deleveraging when prices plummeted in March like so many other funds did
FFC does not use preferred or bonds with covenants to fund leverage. The 1940s act states 200% asset coverage required.
When large drops in price happen to CEF funds the asset coverage ratio goes down. Causing funds to sell at the lows of the market locking in losses.
Micahc, Thank you, I like simple easy to understand. Other CEF’s are leveraged so have to issue more shares or preferred or sell assets to raise cash to bring coverage ratio back in line in time of a crash. FFC doesn’t
Gift from Heaven. Proving once again that it’s infinitely better to be lucky than good, I submit the following tale. B&G Foods, BGS, is a sleepy food processing and distributing company whose management has apparently been involved in some sort of empire building by buying up other companies in related fields. This has left the company with a big pile of debt. Sales and earnings have never been that good until the Covid pandemic hit and, apparently, people started shopping at their supermarket and cooking at home. That caught my attention, and figuring that this trend would last until at least early 2022, I impulsively bought a few hundred shares motivated by what at that time was a juicy 6.7% divi. I did not check what percentage of the shares had been sold short. (I know, I know. Maybe I’m not that conservative an investor). But apparently it was a lot of shares, as this stock has simply exploded upwards in the last 3 trading sessions with absolutely no news. What I paid $27 for I sold today for $43. Maybe I should have waited, might go to $100.
As the Gamestop Reddit kiddies blow up a couple hedge funds, seeing this type of action in a number of stocks. the Hedge Funds that were short GME had to cover and had to sell / unwind other positions to raise capital – hence why the market is down big and stocks that had large short positions are up
Hence I was able to see a nice jump in one of the dogs I have been holding, SKT as well as in IRM which I have been holding due to the juicy dividend
Seems the next targets of the reddit crowd are AMC and NOK. I bought a few shares for kicks and giggles (and I do mean a few)
i sold IRM on the reddit pop. i also bought a little AMC just for kicks.
Frankly i like what the reddits kids are doing. taking out wall street hedge funds. after all the abusive stuff wall street has gotten away with over the years its nice to see it happening to them instead.
i dont recall ever seeing a stock trade over 1B shares outside an IPO.
AMC is at 1.15B right now
NAKD 2bn shares traded
Yeah, I sold most of my SKT and a little IRM on these pops
Limit orders to sell the rest of SKT and more IRM in case they pop again tomorrow
I sold all of my IRM on the pop. Did not understand the reason for the sudden increase, and am optimistic that I can buy again when the price returns to it’s pre-pop levels.
EPR, closed Friday at $ 37.29 and moved up sharply today on heavy volume.
I’m guessing hedge funds were the buyers.
I sold all my shares at 40.80.
2WR, Here’s another “CUP” formation setting up nicely.
Newman — LOL! Not saying EPR is an example but there’s so much casino type money in the market right now that to me, it’s difficult to feel comfortable in equities…. Yet those betting on red are the ones making the money these days, not me…….. it’s tough to argue with that… So what say you for the trading pattern on GME today??? It looks like the dreaded bed-o-nails pattern to me… lol
Wow, GME is not for moi.
It reminds me of the .Com days.
I was tipped ACRS in January 2020 while in Vegas.
Seems a genius in the family researched it diligently and bought his shares at $1+.
Me and the Missus bought 3200 shares at 2.24.
By the Summer of Covid, We were tiring of this nowhere stock. So we sold and broke even to making $ 500 or so.
Now we hear the genius has sold a bit of it at $16 Just last week.
And we went huh?
That’s my story . I am not a Buy and Hold fellow.
btw, In my taxable acct. I just bought 500 EPR at 39.50 and sold 5 July $40 calls at 7.20.
Wish me Luck
One might think that when you combine the new physics: what goes up never has to come down as long as the Fed is your backstop….with Modern Monetary policy i.e. you are not bankrupt as long as mass media says you’re not….that investing in equities would be easier. I find its just the opposite.
I reviewed a number of lists of top global 1000 companies, Fortune 500 companies, Dividend Aristocrats, etc…..and was hard pressed to find 10 companies that I thought would still be in business 20 years from now, even though many of the companies have 50 and 100 year histories.
So for me the question comes down to whether I want to join a herd that can’t seem to rush off the edge of a cliff fast enough or try to maintain a sane position by just having my eyes open and seeing what I see and ignoring what I’m told to see.
It’s a difficult choice, its the difference between making money and not making money. Capital preservation and significant losses. I maintain that the 2008 Financial Crises has still not ended, illusions or delusions to the contrary.
Preferreds and ETFs are my compromise and equities are my gamble. In my perfect world a 5% FDIC insured CD was all I ever needed…..and that world has been totally destroyed and will probably never return….for reasons or in whose interest I still don’t understand
PCF – I don’t see a way to start a comment in the CEF section so I’ll ask here: Does anyone follow PCF and/or have an opinion regarding the rights issue?? the cutoff date = January 22 but with Fidelity, I have to decide by Jan 21… Anyone in this one???? Right now it looks like possibly a good deal to participate but nobody can be quite sure until after the fact just how much the issue itself will lower NAV…
https://finance.yahoo.com/news/high-income-securities-fund-announces-223300699.html
Anyone holding DD and have an opinion on their tender to exchange for Nutrition & Biosciences shares (which will then convert to International Flavors & Fragrance shares? I’m inclined to pass but wondering whether anyone is seeing something compelling in IFF.
RILY – Not that I’m complaining or anything as I do own RILY, but does anyone have an explanation as to why RILY is soaring to 51.50 on a day when it priced 1,228,735 new shares in a secondary at $46??? Usually a secondary leads to a stock temporarily weakening in order to absorb the new supply, but not this time….. Yay!
Many of us are holding “dry powder” to be able to react when the opportunity arises…looking for ideas where to store that powder while we are waiting.
Open to ideas for relatively safe principal but yielding more than zero.
AP, Besides Cash? The problem is that you are going to have to liquidate in order to re-allocate when stuff is cheaper….probably so will those temporary instruments.
Traditionally treasuries can be effective (in theory) and they are liquid and good margin security depending on the term.
Margin used properly and in a disciplined fashion can be effective, but that is the first things brokerages throttle back in a downturn and that should be well understood.
An open home equity credit line with pre-arranged electronic transfer system to your brokerage set up can be a tool for deployment.
Selling the labor of your children in the futures market??
Andrew, I’ve used PULS and JPST ultrashort term ETFs in the past. Now yielding ~1.4% and very stable, but they will drop some if the bottom falls out. Just a lot less than common stock.
Thanks for those Mikeo. I also use ISTB and VUSFX.
Thank you
Newmont Mining NEM yields 2.46% and is a nice hedge to rising rates and inflation.
One thing doable for very short term powder storage is buying called preferreds and baby bonds…. you’re talking about 30 day or less holding periods, but with zero commission trading available you can pretty simply earn 2% or better on an annualized basis on these essentially riskless buys. It’s definitely picking up pennies but when you’re earning 2% annualized with money that would be earning you zippo annualized otherwise, why not… Forget about trying to do this with called bank stocks because they’re always too high, but off names right now provide a safe possibility… they’ll hold value or appreciate ever so slightly toward call and usually are an easy sell without loss should you want your powder wetted, but it’s a timewaster of a trade for any other purpose… An example would be NGHCO which traded today between 25.06 and 25.07. It will be called on Feb 3. @ 25 + accrued which should be approx 25.1093. You do NOT get the 1/15/21 divvy payment however, even at 25.07, that nearly 4¢ you get above cost is about a 2.00% annualized yield, maybe better. Accurate calc is complicated due to trying to compensate for what you DON’T accrue between today’s settlement date today and 1/15 when accrual begins..
Andrew, since we are in the common stock area, i like the prospects of growth and the current yield on AVGO. (I think the yield is 3%+). Have help this a while and it’s had a price run up but i think it’s still in a buy zone.
If you like AVGO check out the AVGOP the mandatory preferred with 8% coupon
I would not buy AVGOP…yield is higher than the common, but it is trading above the highest conversion price. The highest number of shares one can receive on mandatory conversion is 3.0303 shares. That means one would receive shares at a cost of 476.52 based on today’s price of 1444 on AVGOP. Note that the current price of AVGO is $443.
Are we all just playing a futile game investing in preferreds these days??? I can’t ever remember a stock market as is being experienced today where percentage gains on so many individual stocks can be in double digits without any new buyers batting an eye about a concern for valuation… It’s really extraordinary…… It made me do a dumb little calculation…. On a lark, I bot $3500 worth of a new battery maker, EOSE, on November 24. Based on where EOSE stands right now, I would have to have invested $51,250 in 2050 shares of a $25 baby bond yielding 5.5% and held collected a year’s worth of dividends to equal that gain…. Yeah, I get it the gain on EOSE could very well turn out to be illusionary and yes my 2050 shares could maybe have appreciated oh say 5% as well as pay interest, but still, isn’t this a crazy world right now??? The Efficient Market Hypothesis for the stock market seems like such a quaint concept today.. [https://en.wikipedia.org/wiki/Efficient-market_hypothesis] I suppose there’s nothing terribly meaningful about this post. I’m just voicing amazement at today’s markets.
Sorry – meant to say “where percentage [DAILY] gains on so many individual stocks can be in double digits”
2WR, it does seem to be difficult to justify stock prices now and for the past year or more. If inflation gets its legs under itself later this year and/or the FED gets cold feet about pumping money into the economy nonstop there could be a reckoning that is painful indeed.
2wr: We can very effectively turn into an economy based on trading! When the is no risk, there are no losers!
In the words of the investment guru/prophet: Merle Haggard, “drinkin that green bubble up and eatin that rainbow stew…”
Thanks for bringing memories of Merle Haggard into my day. RIP.
Gentle correction: “free Bubble Up”. And according to https://en.wikipedia.org/wiki/Bubble_Up#History, it’s still being produced?
First, I would say I have different objectives for my preferred portfolios than for equity MFs and ETFs. The primary purpose for me as a “buy and hold” preferred investor is income flow rather than price appreciation.
That said, my preferreds in the aggregate are up 30% over cost of purchase, lowering the yield on original investment of 7.43% to a current yield on market value of 5.68%. I have no expectation of further price appreciation, in fact the opposite. But, who knows?
You just need to know what Musk will tweet next, I’ve never shorted a stock but the Signal story sure makes me wish I knew how.
CUBI – Has anyone found a way to find out what to expect regarding when CUBI shareholders should receive shares of BMTX from the divestiture? Given it was completed in Jan 4 I would have thought that the new shares should have shown up in my accounts by now, but calls to TDA and Fidelity Corp Actions have so far been met with blank stares as no one seems to know anything….. CUBI IR is between IR directors so that doesn’t seem to be a helpful avenue either, though the Director of Marketing has been very helpful in attempting to find out more.. So far, though, he too has no answers…
2WR,
Does this help?
file:///C:/Users/jdemaira/Downloads/48012.pdf
EarlyB – that link would only show up on your own computer I think… In any event I just got this from Director of Communications and Marketing : shareholders will be receiving a letter from Jay Sidhu by email that has lots of details (attached). I can also tell you that the website IR page will soon have that letter with these bullet points:
BankMobile – Special Distribution
Customers Bancorp closed its divestiture of BankMobile on January 4, 2021. Holders of CUBI common stock will share an aggregate of 4,876,387 shares of BM Technologies, Inc (“BMT”) common stock. Each holder of CUBI common stock is entitled to receive 0.15389 shares of BMT common stock for each share of Customers common stock held as of the close of business on the Record Date of December 18, 2020. BMT shares are being issued to eligible Customers shareholders exclusively in book entry form by BMT’s transfer agent, Continental Stock Transfer and Trust Company until the transfer restrictions have been lifted or expire pursuant to their terms. Shareholders will receive a statement from Continental that evidences the issuance of the special distribution of BMT stock.The BMT shares received by Customers shareholders are subject to certain transfer restrictions and are not immediately tradeable. The shares are subject to a lock-up period beginning on the January 6 and continuing as described in the letter to shareholders from Customers Bancorp Chair Jay Sidhu. Other important details are also contained in this letter. If you have any questions regarding your BMT shares, you can contact Continental Shareholder Services at 800-509-5586 or via email at cstmail@continentalstock.com.
Doesn’t really answer your question but my shares of MFAC at Vanguard did turn into BMTX on schedule.
No, it doesn’t, Bob but interesting none the less…. So what do you figure accounts for the price drop these past 2 days? I’m not even sure what my cost basis is going to be but best I could figure it’s supposed to have been around 10.38 coming from the CUBI side… Do you know yours???? Is the selling in your opinion just fast money locking in and moving on?
no idea actually. i look at this as having 10-bagger potential and it will take years to unfold. there aren’t many pure play fintechs that i would touch but i’ll give this one a shot.
I’ve been trying to figure out what Bank Mobile does that makes it appealing. I’m sure I’m not the target customer since banking seems so simple to me and can’t imagine what Bank Mobile could offer me that is better. If they truly have over a million customers they are doing something right even if I don’t understand it.
BMTX is not for you, or for me, but the kids are going for it in a big way. It’s online only, like the rest of their lives, and they focus on customer acquisition at the college level. The aim to do full service financial services all on your phone. None of it is rocket science but if they can establish a leadership position quickly enough they will crowd out competition.
I really doubt BankMobile is going to establish any leadership position. Tons of banks already offer mobile banking apps. BankMobile is no different than those. And kids regularly use platforms like Venmo, CashApp, etc.
My 27 year old daughter after graduating from college took a job out of state. She has now been working 6 + years now. She has not set foot in a bank all that time. She uses the app from her bank account that she had in college. She rarely uses ATMs. Paychecks get direct deposited. Money she makes free lancing transferred via Venmo. The rare check she gets she deposits online via her bank’s phone app. She uses a credit card for purchases and has it paid automatically from her bank account. When she had roommates, they would transfer funds to each other via Venmo or cashapp for their share of rent, utilities, etc. I think in 6+ years she has written 3 whole checks. Yes, just 3. So yes, younger adults live online on their phones today. But BankMobile has far from first mover advantage. they are just another option in a sea of existing ones
Mav – that is certainly one side of the debate. The other is that a bank with an online only focus, aimed squarely at kids just entering the financial world for the first time, can leapfrog the others. Jeff Bezos was hardly the first person to have the idea of selling remaindered books (online or not) but his execution certainly was better. Microsoft wasn’t the first company out with a small computer operating system (they actually bought DOS from another company) but they made a greater commercial success of it. Many other examples.
I don’t invest in may individual equities often but I threw a few (thousand) bucks at this to see if the team could make something of it.
Bob – I just don’t see what advantage BankMobile has. I looked at their app, it does the same thing my daughters small credit union app does or my bigger bank app does. As to online only – I have funds at Ally Bank and their app actually does more than BankMobile. So not sure one can say Bankmobiles tech is better or going to leapfrog the competition.
As far as first mover advantage, that ship long ago sailed. So I just don’t see the advantage BankMobile has.
Anyway, good luck with it but I personally would not count on it becoming the next big thing
Mav – Though my expectations are not over the top on BankMobile, I think one point you may be overlooking is that most likely, even your now 33 year old daughter may not be BM’s primary target and, if that’s the case, then the idea that the “first mover advantage” has already sailed could be wrong and will in a way always never sail because I believe BM’s target is essentially first time openers of bank accounts always…. They’ve established proprietary relationships with something like 725 colleges so far with an eye toward becoming the first bank new incoming college frosh consider having with the assumption being that if they can get ’em when they’re beginning their first banking relationship, they’ll have a high percentage of sticky account relationships that will stay with them forever…. So as long as colleges have incoming freshmen every year, BM is trying to position themselves to possibly always be perceived by their target audience’s “first movers.” Throw in their newly established positioning with Google Pay, and it looks like they’re heading in the right direction… But then again what the heck do I know?? I had to look up Venmo just to see what you were talking about…. lol
2WR – I do understand their marketing strategy. And yes, on one level, it makes sense to target college freshman and hope they stick. But think about this. How many college freshman are there that don’t have an existing bank account.
I think you can break these freshman down into a few categories. Those who already have an account, those who don’t but have no job / income, those who don’t but work a part time job in college. So really the target audience is that last group.
I believe you will find a number of students who go off to college have an account already – either to hold funds they earned from working a summer or two in high school, set up by their parents , etc. I mean, how many kids go off to college with no spending money to their name? Or no easy way for their parents to deposit money if they need it?
But let’s assume there are some – well if they don’t work in college, why would they need an account? They have no funds and no funds incoming.
So now you are down to that last group who have no account but get a job in college to earn some money. I just personally don’t think the numbers are that big. I could be wrong of course, but just my sense.
Just my 2 cents from my work experience. Good luck with it
PS – just a correction on what you wrote and sorry if what I previously wrote may have mislead you – my daughter is currently 27. She graduated at 21 and has worked for 6 years
Mav – You know, in the back of my head I was thinking I should probably reread more carefully what you wrote before coming up with that 33 number, but I took the lazy writer’s way out and just winged it.. Sorry ’bout that… I do think that their target audience is broader than how you define it, but still, I also think it’s not a wide moat competitive advantage that they have and the key to success will have to be execute, execute, execute…. Given my initial exposure will be based on such a very small percentage of my already small amount of CUBI common, I suppose my exposure might equate to merely a freezer full of future steak dinners. This will be more of an adventure into de “youts” banking behavior these days as Cousin Vinnie might say than anything else.. Those days are so far behind me I don’t even remember whether I had an existing account heading into freshman year or not, despite having had summer jobs throughout high school and probably even prior. I do remember feeling uncomfortable with money in those early years so the door would have been open to any entity looking to coddle my wallet..
2WR – No problem. And yes, if one can figure out in advance what “De youts” next big thing is, one can profit from it.
As Vinny would say – Oh you like grits? I like grits too, how do you like your grits? Regular, creamy or al dente?
I have not been looking that hard, but I like Enbridge stock for 2021. Already an ~8% dividend on the common, and the dividend could go up quite a bit once Line 3 replacement construction is completed.
Not finding much I like for Preferreds right now. NSARO is my only preferred holding.
Been buying ENB and WMB. Nat gas should be fine long term
I have been in ENB off and on over the years – currently in and added a nice block recently (~31.75) to my holdings. Nice holding, great dividend (reasonably safe), and good prospects.
Jake, Tim and Proto above,
I third…or fourth… the motion. Can go naked, but I am using puts and call with them too, but not necessary. Good volume and bid/ask.
Anybody follow CNFR?? I can’t see any reason why the price has doubled in AH. I’ve followed it for a couple of years, owned CNFRL for a while and to date have seen no signs of a turnaround or any other reason to get back involved, so what’s caused this spike? Somebody knows something because it’s on large volume as well.. Maybe it’s just because Robinhood’s run out of $2.50 stocks to play with..
2WR–saw that pop this morning–can’t find any news anywhere. I learned my lesson on these small insurers with Atlas Financial–they are all pretty dangerous.
Amen, Tim… I had followed Atlas as well, but fortunately never bot in… as mentioned, no visible signs of actionable turnaround in CNFR in the past 2 years imho. Still the volume’s crazy on the day but the whole event seems to be based on absolutely no news….. perhaps just another example of capability to get momo players in today’s market to glom on to anything without knowing nothing……. And who can blame them? They’re winning for now….
Need some advice on a loser of mine. “Freeport” FCX have held since 2013 in a retirement account. Paid a nice 4% dividend at time of purchase, actually picked off a special dividend to boot. Management took a mining company $20 billion in debt with poorly timed bet on energy and suspended dividend. I’ve road this dog for years, with miracle rebound plus another 7% today, now about $500 from break even. If not qualified money? surely someone has had a similar problem? any comment helpful.
Mike – Have you ever heard the Wall St cliche, “The market doesn’t care what price you paid?” I think it’s one to always keep in the back of the head because we all probably have the same tendency to think emotionally and possibly do what you seem to be describing where your buy/sell decision is based more on original cost, no matter how old and out of date that cost basis info may be, than considering today’s prospects for the stock in question…. Here’s one short article that sums this concept up – https://rogermontgomery.com/the-market-doesnt-care-what-price-you-paid-2/. There are probably even better articles out there but the conclusion made is, “ask yourself: would I buy this stock today at the current price? If your answer is no, then it is likely that you are making an emotional investment [or emotional decision to hold]….”
2whiteroses, agree. I remember when Nomadicmist posted “If I didn’t own this stock today would I still buy it now”? I keep that on a post-it note next to my computer. I need that reminder to counter my emotional leanings. Sometimes it’s hard letting go and moving on.
Mike, You have ridden through the commodity bottom. It can be grueling! These are notoriously long, multi-year and frustrating. It’s a throw in the towel challenge…I hear ya.
My take is that now the multi-year bottom has been placed, oil, ag, metals, and the first move up is not to be believed…AGAIN. I see this as the first wave back up, there will be sellers here, then a sustained, higher low which will create a verification for the real trend move up. It could take a while since commodities move slow.
The other good news is that these businesses and tough-ass managers have LONG experience managing these commodity cycles and have wrung out their balance sheets so now, small increases in their commodity pricing can really flow right down to their bottom lines and hence share price. Corn, Copper, Silver, Oil, even NGas.
As an indicator: Basic commodities are at a very low percentage of overall market cap and when they begin to reassert, many institutions will jump in too. I am a holder and overweight commodity companies (using options too) and preferreds in my portfolio. In answer to 2wr above, yes I would buy here.
thanks joel & 2wr, Just saw on cnbc half time’s Pete Najarian just bought Feb. $29 call options on FCX I’m not an option expert or trader, but I’d say he also likes Freeports chances. Thanks again Mike
Does anyone else here follow CASS? It looks kind of appealing at it’s current price. I own some but was considering adding.
Has anyone investigated the much hyped electric battery automotive and lidar autonomous driving fields? I’m looking at Quantumscape (QS) for their solid state EV battery development and two lidar tech companies, Luminar (LAZR) and Velodyne (VLDR). All three common stocks are on a tear, plus they have warrants available, QS.WS, LAZRW, and VLDRW respectively. Any thoughts?
mikeo – wished you had mentioned QS in early November before it increased 1000%! 12.93 beginning of Nov to 119 today.
danzeb, yes it would have been great to be onboard QS 6 weeks ago! When I got edu-ma-cated last Friday I pulled out the double edged leverage sword and bought a few QS.WS warrants and am up about 75%.
180Degree Capital Corp. [TURN] announces a 1 for 3 reverse stock split and possible $2.5 mil buyback
TURN is a tiny (pun intended given stock symbol used to be TINY] registered closed end fund that I only mention because The CEO’s letter to shareholders is such a refreshing read. I own it but mention it more as commentary on a CEO’s candor.
https://ir.180degreecapital.com/press-releases/detail/342/180-degree-capital-corp-announces-the-initiation-of
12/21/10
Fellow 180 Shareholders,
I now know what it is like to live the life of a dog; in that every dog year lived is equivalent to seven years lived for human beings. 2020 has definitely felt like more than one year; it has actually felt like a decade. This year has been a trying one for many as a global pandemic claimed over 320,000 lives in the United States. To put that into horrific perspective, that is the equivalent of having a 9/11 terrorist attack, where over 3,000 lives were lost, every day for 107 straight days. I sympathize with anyone, who, because of the pandemic, has had to endure a loss of a loved one. I equally sympathize with those that suffered from economic hardship as a result of the fallout from the events of this year. For those that have sought to minimize the effects of the pandemic, I question their sanity, their belief in facts and science, and their overall motives. Thankfully, vaccines are here and are being distributed. We are now near the end of what has been a year to forget as far as I’m concerned. Over the years, I have had so many wonderful conversations with 180 shareholders and I truly hope all of our shareholders are safe and well.
As we exit the year, we are going to be instituting two actions for 180 shareholders. First, effective January 4, 2021, we will be initiating a 1-for-3 reverse stock split. Second, we will begin share repurchases under our $2.5 million stock buyback program, particularly in the event that our share price responds in the opposite way to what is intended by this announcement of the reverse stock split. I think almost everyone who has followed us over the last four years knows that we are fully transparent with all that we are doing in our effort to create value for our shareholders. As such, we wanted to discuss each of these steps in more detail with you.
First things first, the reverse stock split. By definition, a stock price split has no inherent effect on a company’s enterprise value. The market capitalization of 180 after the split should have exactly the same value as it does before the split. If I was cooking and the recipe called for a stick of butter, would it make a difference if I added a whole stick or two halves? No. You would have exactly the same amount of butter. But in the three-dimensional psychological analysis world of stock splits, to some, reverse stock splits are perceived to be a “bad” thing, while the popular 2-for-1 (or whatever the ratio is) stock splits are perceived to be a “good” thing. It is true that some reverse stock splits are enacted from low quality companies whose price per share is below $1. These companies face delisting from stock exchanges that have minimum share price rules. Well, that’s obviously not 180. As of the close of business December 18, 2020, we have grown our cash and securities of publicly traded companies to nearly $58 million or $1.86/share. That is up from $17 million net of outstanding debt, or $0.55/share, in mid-2016. Over our history we have carved out a name for ourselves for our unique strategy in the asset class we invest in. 180 has a remade balance sheet, a healthy business model, and hopefully you agree, both a short and long term shareholder friendly view of value creation. We have heard from a number of shareholders that a higher priced stock would attract more attention from both the institutional and retail world of investors. Many institutions require a company’s stock price to be above $3/share, or even $5/share before they even consider investing in the company. Many of our shareholders have asked us to do the reverse stock split to make us more attractive to a more diverse set of shareholders. That is it. There is nothing more complicated about why we sought and obtained shareholder approval for the reverse stock split at our 2020 Annual Meeting of Shareholders. There is no bad news here and there is no ulterior motive! As a matter of fact, while there are still a couple weeks left in the year, we currently believe we will grow our net asset value per share (“NAV”) once again in Q4 2020.
Now, for those that maintain some sort of negative view on a reverse stock split, while I will never agree with your view based on math, I do not live under a rock as it relates to understanding the perception issue related to them. Should unexpected weaknesses arise, we will use the opportunity to repurchase our stock under our Board-authorized $2.5 million share repurchase program. Since our shareholder call in November, we have continued to grow our net asset value through our public investment strategy. While there are still a couple weeks left in 2020, we currently estimate that our NAV will be back above $3.00 by December 31, 2020. Within this estimated NAV, cash and securities of publicly traded companies account for approximately $1.86/share, or approximately $58 million, as of December 18, 2020. This amount of cash and securities of publicly traded companies does not include the carried interest on our separately managed account that we currently estimate will be more than $2 million. Our closing stock price as of December 18, 2020, was $1.91, which suggests investors are ascribing virtually zero value to our private portfolio holdings. To be blunt, I find our public market valuation to be absurd. I have consistently stated that over the last year as our management team has personally reached into our pockets and bought TURN in the open market. Today’s accretive share repurchase is the next step towards the goal of creating value for our shareholders.
This repurchase says nothing about our belief in our ability to create value from our strategy. This has everything to do with our own stock price. This management team has bought over 5% of the Company with its own after-tax dollars in the last four years. We have completely transformed our business with competitive public market stock picking performance. We have grown our cash and securities of publicly traded companies by over $40 million since I joined 180’s Board. Our NAV is currently expected to climb to above $3.00 by year end. And for all that, the market believes our business is worth $1.91? We do not. As such, we will be aggressive in our share repurchases.
If anyone wants to discuss any of these announcements, you know where to find us and I will look forward to that call. On behalf of all of 180, I hope everyone has a happy holiday season, and we look forward to talking to you in 2021.
Best Regards,
Kevin M. Rendino
Chairman and Chief Executive Officer
ORI declared a $1.00 per share special dividend. x-div Jan 4. This is one of my larger common stock holdings. Solid, old line company with a very good track record, 4.5% dividend, and some upside potential on the stock price.
Nice. I have owned ORI for many years. Nice to see yet another special dividend from them.
Liked the looks of the stock and picked up a little today. Thanks.
David P
COST: Costco opened its 800th warehouse today. Five more warehouse openings are slated by the end of November. Revenues are running +10% year/year. Like many, their online sales have exploded this year. They are currently sitting on $12 billion in cash and talk of a special dividend in the spring is swirling.
This afternoon Costco announced a special dividend of $10 per share to be paid next month!
Happy to be an owner Gary, very happy!
COST is certainly interesting. The strange thing to me is that Buffet exited his entire holding of COST. Since he’s smarter than me, that gives me pause…