This page is set up for those that want to chat about various common stocks.
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11/23/2024
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Anyone looking at DLNG? They have eliminated over 25% of their debt in the last 4+ years under refinancing terms in 2019 under a 5-year agreement.
Solid industry, low price to book, and positive EPS. 6 older ice-breaker ships under contract, and they recently announced new higher contracts for two ships when their contracts expire in a couple of years. They seem to be keeping up with maintenance, and even older ships have a good resale value. No common stock dividend while reducing debt.
Plenty of risks and problems. They certainly have a huge Russia war/Gazprom problem that can’t be overstated. They will need to refinance their debt next year, which will be at higher rates. They are in a cyclical risky business, and the loss of even 1 ship could be devastating. They have demonstrated no fiscal restraint in the past, and there is no guarantee they have learned anything for the future. They are an offshore company with murky financial controls. They could decide to incur more debt by buying more ships. They have two costly preferreds in DLNG-A (9.0%) and DLNG-B (8.75%, but it floats in 2 weeks above 11%).
On the upside for the common stock, they could reinstate a dividend next year, which will boost the common. They could get bought like many of their competitors, although their preferreds (DLNG A and B) could suffer (I plan to trim my positions next year just in case). Current price is $2.54, and book value is $8+ depending on the source. I expect any buyout will be below book value. I have a small position below $2.60.
This is definitely a high risk, so DYODD. But, things will change next year, and I think (hope) those things will be good for the common. However, I only put my play money into this one.
IBRX was up again today. Still holding 2/3rd of what I bought over the last year. Not adding more at this point, because it’s 60 to 180 days before the FDA needs to respond or has to respond. The drug does what it is supposed to do with little to no toxic side affects for bladder cancer. Only reason it was not approved was the outside manufacturer quality control. Too much excitement and from stock flippers and they can lose interest just as quickly and the stock nose dive an lose half its value.
This is for 2WR
“Promise me, son, not to do the things I’ve done
Walk away from trouble if you can
Now it won’t mean you’re weak if you turn the other cheek
I hope you’re old enough to understand
Son, you don’t have to fight to be a man”
Title of the song is appropriate for my circumstances when it comes to common stocks.
I took over handling my wife’s account, and one investment I made I take responsibility for, that is investing in common stocks that pay no income. Actually only one, the other one is a bank that pays a dividend. That’s it 2
On a few income stocks that are down at least while I hold I am getting paid, two come to mind MGR and GJH
At any point in time your account can be up or it can be down. In general over a year this account has been down about 1-1/2% this includes the income that has come in and my wife withdrawing 3% in the last 11 months.
Besides the several income holdings being down, the one common stock has been a major contributor to the loss. As of yesterday, IBRX recovered enough in one week that I was able to sell 1/3rd of the position for a 10% profit in 8 months of holding. The rest is still underwater. I was averaging down until I didn’t want to take on more risk. As of this morning the account is up 1/10%
which is nothing.
If this was a business, I would expect that inventory to turn over 5 or 6 times in 8 months at a profit. One turnover in 8 months for 10% is poor business and bad risk.
So heed those words young investors, “Son, don’t do what I have done”.
What pushed me over the edge towards ETFs was exactly the problem you describe. Having a handful 10-20 stocks the volatility of just a couple of stocks can cause trauma.
Majority (80-90%) of my common stock portfolio got parked in VTI (Total Stock Market Index). Been set and forget ever since.
The expense ratio is very low since it’s just a tracking ETF but the yield is less than a mm fund and for $10,000 I don’t get many shares so it’s not going to move the needle much.
I’ve also been shifting to funds lately to add ballast to the portfolio and make it easier to run. Specifically, PEY and SCHD are pretty broad based and emphasize yield. Also, I’m old and eventually all this will fall into the hands of my wife and kids., none of whom have the time or inclination to do what we on the message board do to keep our portfolio healthy. The funds set it on autopilot. They just need to scoop out or reinvest the cash and I’m sure they’ll figure out that part . Full disclosure: I haven’t given up on individual stocks as I recently bought JXN and added to my O holdings. Also have recently added to RNP, a high yielding real estate focused fund.
Hey JerseyVinny,
As I set up the plan for my investments to be inherited, I went down a different path which I suggest to anyone who is planning to pass on significant money to a spouse who won’t/can’t manage investments: do her a favor and find a fiduciary wealth manager for her now. If you are managing the investments, you are likely in a MUCH better position to find and vet a good manager than she will be once you are gone.
I have been asked to help sort out dozens of estates over the years, and watching widows with the “deer in the headlights” look when they realize they have to deal with investments convinced me to get a money manager to protect my wife who has absolutely no interest in managing investments.
It took a couple of years to find the right person. We went through a few candidates and even started having a couple manage funds before I dropped them. I finally ended up with someone we have known personally for decades. We both meet with him periodically and she is very comfortable with him (one of my primary requirements). My recommendation to her is that when I go, she should take him all the brokerage statements and let him take over managing everything. She knows it will cost her a little money and that the returns won’t be quite what I have been making, but the money will be pretty safe and she won’t have to stress about it. Taking that stress off is worth it (IMHO).
During the course of setting up the relationship with our guy, I decided to let him manage a slice of our assets (about 20%). He doesn’t make as much for us as I do, but he is much more conservative and a good “anchor” for me when I start taking too much risk. Having him onboard managing a slice of our money should make a transition to him managing everything a lot easier.
Anyway, just a suggestion.
Thanks for the post Private. We had found a fiduciary manager, but I have a certain distrust after having experiences at Edwards Jones and one I can’t remember when I was younger. Not that it was bad, but their ideas were not in line with mine at the time. This person has several clients who had been with Bernie Madolf so I guess if they are willing to trust another advisor after that..
I like the suggestion of trying a advisor with 20% and building trust then by the time I am done with handling it myself or not able my wife can have someone she can let take over.
I have had 2 problems with the subadvisor approach:
1. It’s very hard to get an advisor to consider your whole portfolio in managing the allocations of their piece of it. You have to be able to define their job such that they can do it without looking at everything else, because even if they say they will do that, they won’t.
2. It doesn’t take much trading by the advisor to ruin your tax strategy for the year. (And if the advisor isn’t doing any trading, it’s really hard to justify paying them.)
Good thoughts David,
The way I handle them is:
1. I don’t ask him to take anything into consideration from the part. I manage. I want him to do his thing with his piece without him trying to “react” to my actions. Only “rule” I give him is “no cash, no bonds”. Lots of advisors look to something like a 60/40 or 80/20 split between equities and bonds. I told him I will do the fixed income for both of us – you just do equities in your part. FWIW, I will probably talk to him about bonds at our next review. World is changing.
If I wanted him to look at my piece in detail, he would be basically managing the whole thing – or at least “leaning” his piece to counterbalance me. Not what I want.
That said, when we have our reviews, he tells me his strategies and I try to articulate my strategies and get his feedback. Luckily, I have known him and worked with him on community projects long enough that he can be very blunt with me (i.e. tell me why my thinking is stupid – and he does). I don’t always take his advice/feedback, but I do try to park my ego and listen.
2. I only let him manage IRAs and Roth accounts, so tax issues are pretty manageable (the bulk of our overall holdings are still in those kinds of accounts). Only real tax issue most years is whether/how much Roth conversion to do.
I was discussing this same “money manager” topic on another board and someone asked me how to pick a money manager. I thought I might share that here. (if this discussion goes on any more, we should probably move it to the Sandbox).
I confess, I found my guy kinda by dumb luck (or my wife’s prayers – if she prays for something, get out of the way…). I had been through several guys (people affiliated with brokers, fischer, etc.) and I couldn’t find anyone that fit. I was talking to friend, and he mentioned someone I had known for a lot of years socially. Turns out he is a fiduciary money manager who had just the right background for us, and we have worked with him for fifteen years now. He leads a small firm, and we also know his more junior folks, so we should have continuity if our guy retires.
So, it is unlikely everyone will have a friend like that, so I asked a couple of people who are way smarter them me about how to find a good money manager and both recommended some recent articles from a group down in Monterey (think “Pebble Beach crowd”) :
This one is from a couple of weeks ago:
https://tinyurl.com/k936efmk
and this one is from this week (I will post part 2 when it gets published).
https://tinyurl.com/yt2dscp5
Hope that is helpful.
As a woman, please try to recognize the continual bias towards females. My female friends are certainly nothing like described here. That being said, I do understand that one cannot suddenly pilot the plane and safely land. I would suggest spouses not familiar with financial planning also work with the portfolio and financial advisors. There are many good spreadsheets and documents which we have in our safety deposit box. “Where is the money?” “Things to do when I die”, “Apple legacy key and such”. These documents have been reviewed by spouse, attorneys, advisor and sons. I am not social security age yet but am a practical person that loves my family.
It is very difficult to find a trustee for estate. I also have friends that we trust; however, they are around my age. In my case, I realized I was avoiding making difficult decisions by punting to friends (CPAs, etc.). We have interviewed multiple trust companies. It is not easy. Most trust companies will not handle foreign assets or esoteric stocks. A compromise I am making is placing assets the trust departments will not handle into separate trust and allowing my sons to be co-trustee. Upon our death they will need to understand these assets. Leaving them under the trust companies assets would require immediate sell and that is not financially the wisest to do. Another complication is incapacitation. Then the trust company must step in and one must decide on their roles, who has the durable power of attorney, etc. Anyone that has worked and has assets is faced with this along with the sunsetting of the estate tax exemption. Hopefully all have taken advantage of this exemption and utilized. If anyone has an answer to all this, it would be wonderful. I suspect not.
Hi TNTowanda,
Apologies if I sounded like I was perpetuating bias against women. In this discussion, I have been mostly talking about my personal experience, and I am a man. I talk about “my guy” because he is a man. I also have couched my suggestions in the context of talking to men because that is where this conversation started (I probably should have shifted gears to a more general audience, but I am not that smart). I certainly think women should do the same planning and are completely capable of doing it – so I am sorry if I sounded like I was implying anything different.
I am not on Social Security yet either, but almost all of the estates I have helped settle have been for men of my parents’ or grandparents’ generations who left wives behind. Cultural norms were different for them, and I have had to deal with things as they were.
In the case of my wife, I certainly married up. She is far smarter and more organized than I will ever be. She runs a school for several hundred (mostly immigrant/migrant) students and she knows every one by name, and their families, and their situations…. She is the head of a regional charity, she has managed a PR firm, etc. etc. In the couple of years we lived in Hong Kong, she ran a 1500 member women’s charity. She can make spread sheets sing and has managed millions of dollars in budgets. It isn’t that she couldn’t manage investments – she simply has no interest. She knows our money manager and is happy to socialize with him, but I have to all but drag her to reviews with him because she has “better things to do”. She is the one who is the keeper of the documents you mention for our family (she says I would just mess them up). She also manages our bills, insurances, etc. – I traveled so much early in our marriage (40 years) that she took that on and confiscated my check book because I just kept missing things (one of the happiest days of my life!).
Point of irony – my wife just asked me what I was writing (as a lead in to “why aren’t you making dinner”) and when I told her, she laughed at me. She reminded me that all of the CFOs of every company I have ever owned or started is/was a woman, because “you need a woman to boss you around”.
I created a company with my daughter about 10 years ago where she is CEO and every one of the dozens of other people in the company (other than me) is a woman. It wasn’t planned, it just worked out that way. Amazing vibe – I just sit back and watch it go. The CFO of that company used to threaten me with bodily harm on a regular basis (and she probably could have done it – she was quite an athlete). She would tell me to just leave them alone and they would figure it out (and they always did). Unfortunately, she passed away last month – which is one reason this whole topic has been “top of mind”.
Finding someone to act as a trustee sure can be difficult. My daughter is now the trustee (after my wife and I) for our family trusts, but when my kids were younger I had a similar challenge. I just couldn’t get comfortable with bank trust departments (too many idiots and they changed every five minutes), and as you said, they wouldn’t handle anything offshore or remotely complicated.
My wife ended up sweet-talking an international tax attorney we know into taking on the job (I think she worked on his wife) on condition that I would do the same for them. That was great for us because he could understand our offshore businesses/assets. Luckily, neither of us ever needed to actually do anything for the other’s trusts. Unfortunately, his adult special needs son passed away last spring, so most of their trusts were terminated and I was released.
Anyway, I apparently need to go make dinner – so, again, apologies for my tone and for how long this post has gotten.
Private thank you for the posts. I think it was several years ago here on Tim’s site that people discussed why they manage their own investments was that certain ETF’s and mutual funds do have low costs but they don’t stay on top of changes in what they hold. Good example would be the recent issue with Riley or a preferred trading over par that gets called and suddenly drops to par.
All the points that TNT brought up I am glad she listed them.
The points about trustee and a executer I have had both good and bad experiences first hand.
My wife’s sister took her father to the family attorney and had the Will changed, had all the assets and real property put in her name and emptied the bank accounts.
The lawyer was a decent guy and he suspected my father in law was being manipulated and he left part of the will unchanged that said all the property in the house belonged to the other 3 sisters. We spent 450.00 to talk to Les Tillum a attorney who told us the estate was under a million and wasn’t worth the money or the mental stress to fight it.
On my parents estate my sister was an Angel absolute Angel. She was care giver for our mother and the trustee and made sure everything was split evenly.
In our current situation i’m not sure any of our family members are up to the task so I would consider a bank’s trustee to be more competent and even handed than any family members so the trade off is worth considering.
Private, Thanks for an elegant response. I think it very common in relationships for one partner to take on duties while the other parties takes on other duties. That works until it doesn’t.
TNT, I think some of it is just “non awareness anecdotal bias”. I even get in constant trouble from my lady for referencing our cat as a “he or his” when its a female cat.
I have a circle of about 50 friends/couples or so close enough to where I know in general their investment styles. Only one other really is a “stock trader”. The rest is mostly real estate, index funds, CDs, or lean on financial advisors. So the guys in my circle arent really anymore attuned to this stuff than their wives are.
With one exception which I thought was funny. One of our couple friends the wife just recently retired 4 years ago from a career in finance working with Dean Witter and ending up retiring from Merrill managing other peoples money. She told me she refused any client under $5 million because they were the ones that panicked all the time any time the market dropped. The ones with more wealth didnt worry and bother her all the time….A while back I proceeded to try to pick her market brain and see what her thoughts were. And she said, “I am sick of that $h!t. I dont follow it anymore. The day I retired, I moved our assets to an advisor and he handles all our money.”
Her husband, my golfing buddy, probably doesnt even know where the money is at. He says she gives him a weekly “cash allowance” for his golf and beer activities and that is all he knows and cares to know about.
TNT,
We share your challenges re a Trust manager. Being transparent, many of our friends’ consternation notwithstanding, I believe a part of our own trepidation is the aversion of thought to paying someone to do a job I feel we can do better ourselves. That’s challenged of course by the notion we may have better things to do than spend too much time in front of a computer trying to tick off another few percentage points here and there. The other part is I really like doing it.
Not knowing the entirety of your situation but recognizing similarities with our own would share the following:
1) Have heard excellent feedback re Goldman and MS. If engaged, I would for multiple reasons opt for a Trust “team” rather than a single manager. My older son uses an MS team and has had consistently positive feedback.
2) I have ongoing in-depth conversations with my partner regarding our investments. Among the least obvious benefits is the “surprise” “brilliant” feedback you may receive on points you may not have considered or that could be viewed differently. Originally with zero finance background, my partner can now critically evaluate credit risk, credit spreads, duration, equity derivatives and most-recently historical yield curve expectations and now knows her way around a basic income stmt and balance sheet. In an “aging” scenario you allude to, this in-home cross-check will be valued over-time like an aging fine wine.
3) Your sons. Many do not like to discuss finances with their children. We have taken the other path and have normalized the dicussion with them. It’s a very infrequent conversation – but they are aware and have time to understand their own responsibilities that will someday – and maybe unexpectedly – land at their feet. Like you we have extensive spreadsheets for them, updated quarterly, with all the info…the what, where, why and how of it all. We too have sons and are fortunate in that one of them started in IB 14 years ago, and via exposure to our’s, the 2nd son has adopted similar financial disciplines and understanding of his own repsonsibilities to his family and someday to us. It’s been accretive for him and therefore by extension for us. Regarding the durable: The durable goes to one son, the directive to the other. They know and they understand. One for the brain, the other for the heart.
My current base case is at some point the boys take over mgmt, which with provisos may be well-before our sell-by-date, and which may include handing it over to Goldman or MS. I’m comfortable with that being their call.
For fun: The joke in the family re the one with the brain…if we get past a certain age and sneeze, he’ll say, “yeh, they had a good run, pull the plug” hahaha. So the directive goes to the one with the heart.
Best to you with your decision-making.
Alpha, We do share many similarities. I have spoken with the trust folks at MS (flew up with the local guy). Agree they are very sharp. Our estate leaves our attorney (who is only 40) as the protector so it gives me comfort if a change needs to be made he will facilitate. Our sons are still in their 20s and neither married. Too many unknowns at present to make them successor trustees. We also have a tender hearted son that I worry marrying the wrong woman could harm him financially; therefore legacy trust with corporate trustee. (It is tragic what I have seen. Recently, a son took distribution from his legacy trust and built an incredibly expensive home in Aspen; the wife now in divorce is taking most of the assets including that home. )
And finally, we recently met as a family with our estate attorney. The sons will circle back again with him. My husband has a good awareness of our situation if I should pass or become incapacitated. He strongly prefers a corporate co-trustee with our CPA firm advising on an hourly basis.
These are difficult topics but personally, I think both spouses and children should fully understand. Our dear friend is now being sued by her stepchildren as their father failed to communicate with them. He (in my view) faltered on a basic responsibility; though in totality he was a good person. The legacy he has left is one of anger, hatred and mistrust.
TNT, We’re helping each other here. I read your post twice. A lot of good info and advisories. Yes two wonderful daughters-in-law joined the clan in the last two years. The unthinkable, however improbable, is still a possibility.
We have been planning to make the adjustments and you just landed a well-placed elbow.
Thanks to everyone for sharing, been up 16 / 18 hours straight and just landed after a 10-1/2hr. Flight. Still 8 hours to go before we get home.
After we rest up from our vacation I want to go over this again. Hope everyone has had a good weekend,
That’s a long day Charles! Good luck with the jet lag!
Regarding this discussion about trusts, please see my question on 1/01/24 on this thread. I’d appreciate any feedback. Thx
My cost basis in Microsoft is $25/share. I never sold (and it didn’t pay dividends). My children and grandchildren will inherit. I preach the same thing: Invest at a young age; eat beans if you have to but build wealth for your family. No inheritance just buy and hold with the gratitude that I as an American female have this opportunity. My NVIDA cost basis is similar. Looking at equities on a daily/monthly/yearly basis will not build wealth. Many times I was told to sell as I could get better returns, blah, blah, blah. The tax efficiencies of buying and holding cannot be beat. Do your research and invest. Funds are great too and I hold many. Personally, I don’t know anyone that became wealthy on fixed income alone.
TNT listen to the women in the house, they have a long term view of things. But there comes a time you no longer want to work or can work, at that point the money quits coming in. Then your money has to work for you and pay you an income. My wife worked for Costco for 30yrs and bought her company stock at market price with 10% matching from the company in her 401k. She started out buying COST at 8 to 10.00 a share.
But 356 shares of stock only pay a dividend of 1,452.00 a year. Not quite enough to live on when your seventy years old. With about 1/2 the IRA invested in preferred, ETD, and bonds its generating about $49,000.00 a year now and the IRA is still worth the same a year later even after she has pulled out 3%
My wife is not as mad at me as she was a year ago when I sold the COST stock. It at depends where you are at on the journey through life.
SO, yes I agree common stock is appopriate if your younger.
Charles. I agree which is why I stated start early and eat beans! I am curious as to why your wife is not managing her own hard earned assets? She should! And I love my Costco stock, doubt I will ever sell. Another reason to love equities they allow me to focus on income generating work. I doubt I will ever not be doing something as I take joy in challenging myself.
Funny you should ask. I started out in about 1982 with investments. Did some myself and tried a investment manager ( Edward Jones) invested in a stock purchase plan with Georgia Pacific which I used to buy my first house, did a 401k with another employer and when I was laid off I transferred it to a IRA in 2012 right before the company went BK
I used to read the Wall St journal and when I had an early account witn TD I would read the paper booklet of stocks they sent me every month front to back.
My wife on the other hand had a union job with the retail clerks union that she saved only 10,000 after 8 yrs
And then her 401k with COST
I try explaining what I am doing and her eyes kinda glass over. On the other hand my eyes start glassing over when she starts talking about one of the 2yr old great grandkids giving her mommy a funny face just like her momma did when she was 2
I grew up in a more rural area and the local credit union had on offer CDs. So every 2 months or so I would lock in another 5yr CD @ 11% minimum required $500.
In around 1991 or 2 CD rates had really dropped. So I started looking around for alternative investments. Had to travel 3 hours with a bag of cash to the major city to put money on deposit at a national bank which offered at that time mutual funds. After reviewing the funds on offer I picked an all stock index mutual fund with the ultra low MER Rate of 4%.
After 2 years of receiving 3-4% returns which was below CD rates. I found out this same national bank had a brokerage service starting up. So I got an account. With my annual fund report in hand for the past 2 years found out the top 25 stocks equaled 45% of the AUM of the fund.
So after waiting 2 weeks for my money to transfer into the brokerage. I called up the broker and bought the exact same 25 stocks exactly allocations as the fund and waited.
Miraculously performance improved to 8-9% per year.
On my statement it also listed cash. Even though I had not made a deposit in the account for over a year. So I called up the brokerage thinking a mistake had happened. It was explained those are dividends and its my money. So I asked what I could do. The agent then enrolled me in the dividend reinvestment plan.
This rural farmers life was never the same again.
I disagree, your common stock allocation should not be based on age, it should be bucketed. Everything beyond the 10 year bucket should be in common stock. As I’ve mentioned, a 70 year old should be budgeting to live for another 30 years.
HIFS – Hingham Institution for Savings (Microcap Regional bank)
Specialized mortgage lender with commercial lending operations in San Francisco. Recently this area has been in the news for big property value write downs.
Net interest margin has compressed into oblivion due to deposit problems.
No analyst coverage which also can cause stocks to be left out in the cold like orphan children in distress.
Think this will by a flyer once rate cuts take place. Have taken no position but appears to be a highly efficient lender stuck in bad circumstance.
For those who want to practice or want to make a few dimes and quarters flipping a stock I want to suggest looking at KRP. Look at the range of movement during the day and week. Also look at oil futures. But remember that the upcoming dividend is based on the last 3 months. Also keep that in mind when the next dividend date 3 to 4 months out is going to be based off profit being made by the company right now. If oil drops 3 to 4 months from now you will know that dividend in 3 to 4 months is going to be good and the dividend chasers will drive the price up prior to that x- dividend date.
Cheap enough to play with.
XOM and PXD – Megadeal in the works –
https://www.wsj.com/business/deals/exxon-mobil-closing-in-on-megadeal-with-shale-driller-pioneer-31b4092e
Exxon Mobil XOM -2.25%decrease; red down pointing triangle
is closing in on a deal to buy Pioneer Natural Resources PXD -0.17%decrease; red down pointing triangle
, a blockbuster takeover that could be worth roughly $60 billion.
A deal could be sealed in the coming days, assuming the talks don’t hit a last-minute snag, people familiar with the matter said.
This is a developing story. Updates to come.
Write to Lauren Thomas at lauren.thomas@wsj.com and Laura Cooper at laura.cooper@wsj.com
Just looking quickly at PXD bonds, they have some very low coupon issues outstanding the 101 calls under Change of Control…. This from a Pioneer 1.90% due 8/15/30 worth only 77.548 right now….. What a home run if a deal were struck in such a way that this would be invoked….. Obviously it’s an incentive to structure so Pioneer remains outstanding and not subject to Change of Control. I have no clue if this is worth a shot – wish I did – I also need to find the definition of a Change of Control Repurchase Event… PXD is Baa1/BBB, YTM at this price is only 5.94%
Offer to Repurchase Upon a Change of Control Repurchase Event
If a Change of Control Repurchase Event occurs with respect to the notes, unless we have otherwise exercised our right to redeem the notes, we will make an offer to each holder of such notes to repurchase all or any portion (equal to $1,000 or an integral multiple of $1,000) of that holder’s notes at a price in cash equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest, if any, on the notes repurchased to the date of repurchase. Within 30 days following any such Change of Control Repurchase Event, we will send a notice to each such holder describing the transaction or transactions that constitute the Change of Control Repurchase Event and offering to repurchase the notes of such holder on the payment date specified in the notice, which date will not be less than 20 days or more than 60 days from the date such notice is sent, pursuant to the procedures required by the indenture and described in such notice. We will comply with the requirements of Rule 14e-1 under the Exchange Act, and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of any notes as a result of a Change of Control Repurchase Event. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control Repurchase Event provisions, we will comply with the applicable securities laws and regulations and will not be deemed to have breached our obligations under the Change of Control Repurchase Event provisions by virtue of such conflict.’
“Rating Decline” means the rating of the notes shall be decreased by one or more gradations (including gradations within categories as well as between rating categories) by each of the Rating Agencies; provided, however, if the rating of the notes by each of the Rating Agencies is Investment Grade, then “Rating Decline” will mean the rating of the notes shall be decreased by one or more gradations (including gradations within categories as well as between rating categories) by each Rating Agency so that the rating of the notes by each of the Rating Agencies falls below Investment Grade, on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the 30-day period following public notice of the occurrence of the Change of Control (which 30-day period shall be extended so long as the rating of the notes is under publicly announced consideration for possible downgrade by either of the Rating Agencies; provided, that the other Rating Agency has either downgraded, or publicly announced that it is considering downgrading, the notes).
I wonder what a $60 billion offer would work out to as far as what the holders of each share of PXD would get? That is the figure that is being bandied about.
Just to finish up on this, with the definition of “Rating Decline” being a part of what defines Change of Control Repurchase Event, it looks as though there’s nothing to see if XOM takes over PXD no matter how the deal might get structured. No Change of Control Repurchase Event should occur imho because XOM carries such a high credit rating….
“Change of Control Repurchase Event” means, with respect to a series of Notes, the occurrence of both a Change of Control and a Rating Decline with respect to such series of Notes.”
Sounds like both conditions must be met before they have to repurchase the bonds. They could do so for other reasons, including it being a condition of sale, but it doesn’t appear they are required to do so from what I was able to tell by skimming through it. But I am not used to looking at these things.
As I think most will know, this deal has been rumored for a while.
There is still lots of value in the E&P space, and there are plenty of other pure plays on the Permian out there beside PXD. Most of these names are paying good dividends, are buying back stock and/or buying back debt. Some of the better names in the E&P space are given in the Sankey Research which I posted below on Sunday.
The problem the space is the volatility…
There’s some chatter about the effects of the recently increasing interest rates on older Treasury Bonds held for investment. (Bloomberg radio, Market Watch) Reports are that some of this long paper is now trading around 45 cents on the dollar down from 60 cents during the March regional bank crisis. (For a while back in 2021, 30 yr rates were under 2%.)
When quarterly reports come out, it would not surprise me to see some negative impacts on insurance company and regional bank balance sheets (and on mREIT NAV re-calculations) because of falling asset values. Because of the way insurers report, it would not surprise me to see the biggest impacts there. Regional banks may be more insulated. The regional banks still have the benefit of a Fed program that values the devalued Treasury paper at par for borrowing purposes.
Just my opinion.
Picked up a little RTX today below $70.5 on a GTC I wrote a while back (and forgot about). RTX has been taking a pounding because they have a problem with some Pratt and Whitney engines that will require inspection and potentially some parts replacement (not current production engines). They already took a big reserve for it (half billion?), but the stock got hammered anyway.
I got into RTX when the Ukraine war started because I figured a lot of Raytheon missiles would get used/need to be replenished. flipped it twice for about $20/share, and was looking to get back in when things settled out over the engine problem. Guess I am getting back in starting now.
I still think they will do a lot of missile business with the US gov., Ukraine directly, and with the countries in Europe who are supporting Ukraine. Everything from Stinger and TOW to Patriot. Lots of gov. money to be had.
I also got into Aerojet Rocketdyne because it was the primary manufacturer of solid rocket motors for many US-produced missiles. It was acquired by L3Harris last year. Made a little on the sale. I looked at L3 but didn’t bite.
For those looking for yield from Common stocks. This list becomes relevant if WTI/Brent selloff meaningfully from these levels. Would not buy in here.
https://sankeyresearch.com/2023/09/27/morning-us-big-oil-cash-return-scenarios-2024e/
A nice summary of projected cash returns from oil and gas E&P firms in 2024 based on reasonable ranges for commodity prices. Projected cash returns are presented in various formats including cash dividends and buybacks.
IMO HES gets a hall pass on cash returns to common as they put CAPEX into Guyana offshore play in JV with XOM.
Disclosure – I am broadly long the common and notes in this sector (also midstream MLPs) with an overweight position. Also I am short a large number of 20 Delta Put options on December WTI futures – a Texas Hedge 😉
re: why NEE is down, following is from CFRA:
We cut our 12-month target by $2 to $72, 21.1x our ’24 adj. EPS estimate (unchanged at $3.41; ’23 estimate remains $3.12), a discount to NEE’s 10-year average and a roughly 23% premium to peers. Shares are trading down ~8% today following two updates. NEE announced the sale of Florida City Gas. While expected to be accretive to earnings and possibly improve NEE’s financial flexibility, we see the divestiture as relatively immaterial to our view. More important, NEE significantly cut its long-term growth guidance for NextEra Energy Partners (NEP 40 NR), citing financing constraints within a higher interest rate environment. NEE owns around a 55% interest in NEP, which falls under the NEER subsidiary, a business we think is being valued lower in a tough environment for renewable energy operators. Nonetheless, NEE maintained its attractive EPS and dividend growth guidance. With NEE trading at a sub-18x ’24 P/E multiple and offering a 3.4% dividend yield, we see increased value in the shares and move to Buy
Barron’s has an article covering 6 large food companies. (May require a subscription to access.) Barron’s seems to like Mondelez the best. (Interesting if only because I started my research after buying Mallomars. ) Morningstar, which I rarely visit, also has articles on “safe” or “higher yielding” stocks. Each article seems to mention at least one food company. Perhaps a trend.
(Citadel mentioned KHC as an income choice. I had plugged in Conagra to replace a smaller and weaker food company. CAG’s divvy went up. Its price is down though. )
I ranked the stocks by divvy yield and YTD performance. I would not buy any without more research. In addition to the obvious risks, like shifting consumer preferences, commodity costs and supply chain issues, there are things unique to each stock, e.g., Campbell / Rao, Kellogg / split. etc
Ranked by dividend yield
Conagra CAG 4.8%
Kraft Heinz KHC 4.78%
Kellogg K 4.00%
General Mills GIS 3.58%
Campbell Soup CPB 3.44%
Mondelez MDLZ 2.36%
SPY 1.47%
Ranked by YTD performance, mostly red
SPY +20%
MDLZ +19%
K -15%
KHC -18%
GIS -21%
CPB -24%
CAG -25%
With Treasury rates above most divvies, and no risk to principal, inertia rules. It is hard to get excited about adding any more stocks. DYODD.
These 6 Food Stocks Have Gotten Hit Hard. It’s Time to Chow Down.
https://www.barrons.com/articles/6-beaten-down-food-stocks-buy-c93ad194?mod=md_stockoverview_news
BJ I like your posts on common stocks. Please keep throwing ideas out there. Couple to add are Hormel, Tyson, Pilgrims Pride and JBS but as you note, there are a lot of headwinds in the food business. Hormel is facing a strike. Cost of transportation, cost of raw materials. I can’t believe the cost I am seeing on Halloween candy and the size of the packaging.
Phama companies right now seem to offer higher dividends and opportunities for future growth for example.
I am starting to look at pharma. Pros: Nice divvies, possible growth from new products. Con: prone to large fall offs in sales when patents on popular drugs expire. Miracle drugs are more complex than cookies, but like Chips Ahoy, are eventually at risk of store brands offered at lower prices. Unless you have smart patent lawyers.
High candy prices are not a surprise. Sugar and cocoa prices are up 50% this year. Corn syrup is supply constrained.
All the pharma companies are spinning off their generic business no money in it with competitors overseas like India. Of course, when Covid happened and there was a supply chain disruption was when we found out how important it was to have manufacturing here. I use Costco and there were times they couldn’t fill a prescription or only did a 1/2 fill.
I believe Novarits is spinning off Sandoz it’s generic division and concentrating on new bio drugs. If the government needs to regulate something I wish they would made drug companies have domestic manufacturing plants instead of letting do off shoring to China and India.
Sure wish the US would stop subsidizing sugar/blocking sugar imports. US consumers pay about 10x the world price for sugar, and much of the US sugar is now grown in the eco-sensitive areas in Florida.
The Florida sugar producers buy a lot of members of congress – umm I mean make a LOT of congressional election fund contributions….
After a great deal of thought, I concluded that auto parts are a great business. The logic is compelling. There a are a lot of old cars on the road, new car prices are twice as high as what my parents paid for their house and there is just so much you can do with duct tape or pulling the fuses for blinking running lights.
The analysis now looks flawed. First, Carl Icahn’s car parts operation went bankrupt. Carl Icahn is a great investor, at least according to Carl Icahn and his fans. Next…
Advance Auto Parts AAP is down today, S&P Global pushed its ratings down to junk. It is trading at a multi-year low. (Attention buy the dip fans. Get in before the next round of buy recs at The Other Website.)
I take it that AAP uses the time honored retail practice of We Make More Than Our Competitors On Every Item We Sell otherwise known as So Now Our Customers Are Shopping Elsewhere. This is an established grocery industry practice. In the short run, it works to pump up quarterly profits and cash-and-dash profit-linked executive bonuses. In the long run, customers wise up and move on.
Still looking at car parts. Right now I have only two strong buys: duct tape and Lucas Oil Upper Cylinder Lube & Fuel Treatment.
Just my opinion. DYODD.
My big concern about auto parts is that so much on new cars can’t be fixed by the home mechanic. A lot of old cars out there that can still be repaired by “ordinary” people, but so much on the new cars just can’t be. So, the auto parts stores will be selling into a shrinking market.
So much in cars is computerized in a way that you have to get the dealer or a specialized shop to either fix it or to update the computer if you fix it (and charge almost as much as if they had fixed it).
Example 1: My son (an engineer) needed to fix a failed android auto connector on his couple-year-old-Explorer. Dealer wanted $500, He could get the part for $35, but it would require the dealer to update the computer to accept it, at the silly price of $450. He found a hack online to force the computer to update itself, but if it had failed, replacing the computer would have been $900. luckily for him, it worked.
Example 2: I was going to replace the windshield on my wife’s new Escape (rock damage). My deductible is $500, so I figured I could do it myself (I have replaced many a windshield). Windshield quoted at about $350 – but after you replace it, the sensors on the car have to be recalibrated, which costs over $1000 (and requires specialized equipment). So, I had the shop do the whole thing for about $1300 and let the insurance handle it.
Example 3: my son’s buddy bought a Tesla S a few years ago (he has since sold it). You couldn’t fix anything on it. Essentially all parts had to be bought from Tesla, and most repairs require a computer update to “accept” the fix – so even if you could fix it, Tesla would charge the same amount to update the computer as if they had done the fix. He was in a tiny fender-bender (bumper dent, fender scratch nothing structural), which would have cost about $1000 on a normal car (mostly paint), but Tesla quoted him $22,000, and a four month wait. He had a different minor repair done, and the overnight software update “bricked” his car. Couldn’t even get the doors to unlock – so he had to put his 4 year old through the ski-passthrough from the trunk to manually open a door.
As congress keeps mandating more and more technology into cars (backup cameras, braking sensors – and a bunch more proposed), this “unfixability” will just get worse (and new car prices will just keep climbing).
So, I think the auto parts business will have to change dramatically as more of these “unrepairable” cars get on the road, and I think their “addressable market” will just shrink away – but that is just my opinion.
Bear, Private, revisiting the common stock chat here with you. In keeping with the forum I will stay with common words, my tired mind has trouble recalling esoteric ones and I had to cut back on my early morning caffeine jolt as it doesn’t agree with the stomach. Been reading over on that other site articles by the Value Investor.
One common denominator on companies is brand name recognition, customer loyalty, and ability to keep margins up. and numerous other factors.
Bear mentions auto parts and consumer foods. Recently I took an old Ranger out of storage that had been sitting with old gas in it. I had it towed to the mechanic and thought with it being fuel injection he would drop the tank run cleaner thru the lines and pull the injectors to clean them. Nope, he put new gas in it and fuel cleaner and fired it up. Told me to run cleaner through it for several tanks worth. I went to Kragen and was overwhelmed by the variety of products on the shelf. Seems like a lot of competition and no wide moat keeping anyone from entering the business.
Next consumer brands. CLX is a well known household name and I suppose everyone has one of their products sitting on the self at home, but they make a common product that you have to keep replacing as its used. But I quit buying the brand name years ago. Why? again it’s cost and generic competition. I looked at the analysis done by Value Investor and I suppose I should do my own. But from what he laid out you have to ask is the investment worth it? Does the company and the common have anything going for it? I suppose picking a good entry point and getting 4% yield might be worth it but you can get a better deal on their bonds.
My type of research on consumer brands is walking down the aisles of my local discount grocery store. Here the product failures, marketing failures and discontinued products find a home. Take CPB soups as an example. 3 different sizes and shapes of cans for the same chicken noddle. What is going on? Package shrink, difficulty getting consistent supply of the same size or label change and old label being discounted? But! same story for my buying habits, is the cost and volume I get for my money. How does this relate to the common stock ? Would I buy the stock if I don’t buy the product? Well, between CLX and CPB both have about the same dividend yield you get paid to hold but one stock is almost 1/3rd the cost. So it comes down to what I can afford to buy.
Don’t get me started on pasta. The old family fav of golden grain is twice the cost of a Mexican brand. About the only splurge our family does is mayonnaise.
— Very OT, but I use Seafoam to clear out the gummy old gas in the snowblower. An incredibly powerful marine solvent. Was going to replace my vintage non-starting snowblower when somebody at a parts shop recommended Seafoam. It worked. I use the kinder, gentler Lucas in the gas tank, a lubricant not a cleaner. I am very brand loyal when i find an additive that works. I don’t think either Seafoam or Lucas is publicly traded.
— There are numerous articles on shrinkflation. The consensus is that Americans prefer shrinking boxes over increasing prices. My latest surprise: Post Great Grains, the boxes for all varieties are identical in size, all the boxes look identical, all varieties are priced the same, however the product weight of each variety varies by about 10%. +/-
– Name brand vs non-brand items. You may have to shop around for something to your taste but store brands are often as good or better than national brands. Also, some of the national brands have changed/degraded ingredients (several candy brands) or moved to Mexico or more vaguely, like MDLZ are using “external manufacturers” so you are not getting the old products anymore anyway.
Fears of consumers switching to cheaper store brands have not stopped Mondelez, from getting a “favored dividend” payer recommendation from Morgan Stanley. (A fairly bizarre list, dotted with fallen angel REITs and utes , predicting 60-85 pct gains for its favored stocks and 40 pct losses in disfavored.)
Disclosure: I am long 2 boxes of Mallomars (made in Canada) and short 1 box of Chips Ahoy (store brand, crisper and more chips.) DYODD
Trader Joe’s Halloween cookies with creme pumpkin spice center I found at my discount store last year company from Canada. Like you, I read labels and look at the Oz’s per box. Lol
Out of several mentioned consumer companies by readers in the comments section I found one so far that looks like a good prospect.
If UL dropped enough that it’s dividend was 4% I would consider it a buy
With the re/friend-shoring neo(too soon?)-military/industrial-complexity a reality across NAFTAlandia, perhaps, parts for things that fly where the prospect of frequent parts replacement is pretty much a certainty, and perhaps, parts for things that fly and tend to blow-up are worth a look? Total-parts replacement after a single use 😉 On a diversification hunt in corp-bonds the other day I became intrigued with the TDG business model. Bought some cusip 189054AX7 TransDigm below par. My effective yield is ~7.6%. The call parameters require some head scratching, but again, the ~$87.65+/- below the par of 102.438, got this neophyte thinking there is reasonable chance I might get the last laugh. I picked about in the financials and wasn’t frightened off. It is B3/B-, making it the junkiest-junk individual bond I own. I’m a coward. It’s true. Just looking at slot machine makes my stomach churn. What is interesting is this holding company is run the way I’d want to see a hedge fund run. Kinda reminds me of a mini-3M during it’s product development heyday(s?). Rare bird. I was explicitly shopping for cbonds in duration range of 4AX7. That combined with M-star’s “Wide-Moat” (implying they are positive on the business model 20 years out) and their capital allocation rating of “Exemplary” (generally suggests momma didn’t raise no fools) is a good starting metric to see for an aggressive growth stock focused on complex high risk specialty parts in a relatively risky corner of the Industrials. The Hedge fund roots of the founders implies this firm knows it’s way around debt and isn’t afraid to use it. Their market cap is about 47B today. When you see the price the chart you’ll probably understand why the 7.6% reeled me in.
Yet, I see you, BearNJ, bought CAG, currently a MS-5star stock. So I have to presume you are somewhat partial to ‘deep value’ prospecting. As the thread here is ‘parts is parts’ I’d say take a gander at RTX while it’s stock price is doing touch-and-goes into MS-5star valuations. Unlike CAG’s “standard” capital allocation rating and “no-moat” assignment (something about low R&D and advertising-spend compared to competitors raising the risk WallyWorld might start looking askance at CAG’s shelve real estate…), RTX is a ‘Fat-boy’ Moat with “Exemplary” capital allocation cred. RTX is over 100B market-cap versus ~13.4B for CAG. CAG pays a larger dvd in absolute terms, but, there are many facets to Total Return …. What ties RTX to the TDG story and suggests one potential scenario where I might get the last laugh with the call is the tribulation RTX is currently having with a metallurgy mishap on a complex Pratt and Whitney turbine “part.” I be ‘thinking’ (using that term loosely) the potential for their bad news becoming my good news is a possibility for me perched higher up in the capital structure. IDK. Now your point about cookies being bit less complex than “parts” is noted. But if TDG can find and firmly establish it’s niche under the protective wing of the military-industrial complex, not unlike RTX, then the complexities of manufacturing complex parts during the current chaos during the gridding up to restore “the arsenal of democracy” TDG might will enjoy having a bit of oil poured on the choppy seas ahead.
Let’s face it. The age of the ubiquitous ‘missile’ systems (and their “parts”) for all budgets has arrived. If past is prologue it’ll kick-start the coming together of a multitude of manufacturing technologies, the re-combination of which, will both surprise and ‘delight’ (as in, light up the night?).
I only got thru half of your first paragraph but your quoted CUSIP refers to Clorox Inc 1.80% due 5/15/30 according to Fidelity. CUSIP 189054AX7. ”
Your CUSIP is 893647BQ9, Transdigm 4.875% due 5/1/29 and its “par” is not 102.438… Par is 100. 102.438 is the price should it get called at its first available call date of 5/1/24. Is there reason to believe that’ a call is probable? On the surface it sure doesn’t seem likely.
You are correct I read the wrong cusip off my hand trade journal entry … again!?! Second time I put my hand on that hot stove element! Clearly, I have to edit my entries better when ‘writing-out-loud’ about individual bonds. I think I’ll plug any cusips into finra.org first going forward. Of course, it really brings home the point how important it is to lead off with the cusip.
My broker’s terminology for this individual bond under “Calls” reads
“… Callable 05/24@Greater of 102.438 or Make Whole – Par Call 05/26 …”, then the “Call schedule” shows “101.22” on “05/01/2025” and then “100.00” on “05/01/2026” … a lightbulb might be flickering on and off in the old noggin now! Then on the order summary there is, “Yield to call 33.425”
So that’s the ‘teaser/lure’ that gets me bite and set the hook on a B3/Bminus? If I get the YTM while helping to rebuild the “arsenal of democracy”, then I’m happy to lend a few bucks to TDG’s vision and shared prosperity (cue up the National Anthem soundtrack in the background 😉 … So, the “Call Schedule” is telling me my ‘advantage/enticement’ to get ~”YTW 7.6″ ends 05/01/2026. And that is what you are calling the ‘real’ or actual “Par.” 5/01/2026 is the moment in time where the (imprecise term?) “Price” becomes equal to your precise use of the term “Par” and the “Redemption Price” on the ‘pre-buy Fact-sheet.’
Since you didn’t use a term of art for the “102.438”, which I incorrectly referred to as Par, I guess then, I have to use the same mouthful you did, “102.438 is the price should it get called…”, when referring to it (102.438). Darn! No wonder there isn’t much witty bond-banter.
With respect to, “Is there reason to believe that’ a call is probable? On the surface it sure doesn’t seem likely”, is the conclusion I came to using my “neophyte’s” muddled understanding of the terminology for individual bonds. As that was my objective it’s good to hear from an experienced bond trader.
I am certainly glad you didn’t need to read past the “half of your first paragraph” in order to help me as much as you have. Many thanks, as it’s the bonds that interest me the most at the moment anyway 🙂 The last thing I want to do is waste a benefactor’s time as I build a position in this new (for me) asset class. I’ll work on my posting process for individual bonds so you (any other reader’s too) can spend more time on what matters rather than unravelling my brain-farts. Sorry.
As an aside I was rummaging around the same picnic grounds as BearNJ it seems. For I counter balanced my foray into the bond junkyard with a bit of IG CAG “Symbol:CAG4739466 CUSIP:205887CB6 Bond Type:CORP” (CLX too of course) since the common didn’t inspire me this week. Then there is the fact the page heading is “Common Stock” so why mention it? RTX common stock still intrigues. Once we in the USA get past the silly season (when Politics lowers our collective IQ as a nation by 30 points) and the ‘loyal’ opposition can get back to protecting manufacturing jobs in their districts and stop pretending we are handing over actual cash to Ukraine rather than to where it really goes, that is, to our military-industrial base’s manufacturer’s so they can afford to comply with “made-in-(insert your favorite NA country)” mandates. Then, maybe, the defense sector will get more long-term boosts whoever get’s in the Whitehouse and the Reality-Distortion Field media machines take a rest (my Sinclair tie in :)). How one has a serious discussion about tasty industrial pork-pies without broaching politics is a puzzlement. As an American I’m not exactly up to speed with this self-censorship thing. Hope I haven’t given the moderator any silver-hair.
Made a couple bucks on AAP when it recently dropped massively. Just a mean-reversion-sell-on-first-red-day-or-within-five-trading-days little wager. Odds of success improve if the stock/sector was in a pre-existing up trend. Covered my store-brand instant coffee budget for Fall (and Winter if I cut back on caffeine). As for actually Investing in AAP? I think Private sums up the risks that the old, “it’s a Recession so DIY auto-parts” is the easy bet, isn’t so safe anymore well enuf for me. I suppose Mickey-D’s is still the ‘bell-weather’ for that notion.
I actually wended my way all the way thru your word maizes this time so just to help you to feel more comfortable with bond lingo, here’s a link to Investopedia’s definition of what “par” actually is – https://www.investopedia.com/terms/p/parvalue.asp. What you are quoting are the various declining call prices should the bond be called at different times before maturity – Technically, not even your quoted 5/1/26 price of 100 is a reference to “par.” It’s a reference to the 5/1/26 and beyond call price as a percentage (aka 100%) of par.
Also just so you know, the quoted YTW (“yield to worst) at 7.60% is NOT a yield should it be called on 5/1/26. It is the yield if held to maturity in 5/1/29. Since the bond is trading at a discount to par, should it be called on 5/1/26 your yield would be better than 7.60% but I’m not going to calculate it to see by how much… And I suspect, although I did not verify, that your quoted 33.425% yield to call is the yield calculated to that first call on its first date of 5/1/24 @ 102.438. That’s nothing more than a theoretical yield to first call, but it’s up to you to decide just how likely that might be. It may be an eye-popping number, but as AW points out, there’s lots of reason to believe the odds of it occurring make it highly likely to be a fantasy number. Oh it’s accurate I imagine, so not really fantasy but the odds of it actually occurring are what makes it a fantasy. or wishful thinking yield…
Hope this helps..
caw_caw, re staying away from politics, my observation is that the highest priority is to stay away from ad hominem attacks (“x person is a clown”) or personalizing policy (“x person is responsible for such-and-such stupid policy”). Just my $0.02…
Hello Caw Caw – not sure the purpose to your note and I wish you luck.
I did have a look at TDG – aerospace is always an interesting market. I have a few comments (for what it’s worth).
Their revenue is driven by 3 segments: commercial OEM, commercial aftermarket and defense. They have eye popping 51% EBITDA margins and out standing growth potential from the commercial segments. Typically an aerospace supplier with margins like that has a wide moat due to proprietary technology which is impossible to copy – this is a good thing.
Their defense segment looks like a low growth cash cow. The action is in the commercial business.
Looking at if from a fixed income perspective, what would give me pause would be the particular note that you are looking at and particularly the yield. I don’t know that these notes compensate for the risk.
The capital structure is comprised of Senior Secured debt ($13B) and senior subordinated debt ($6B). The note in question is a Sr Sub. The Senior secured is further broken into First Lien Term loans (coupon SORF +~3%) and Senior Secured Notes (coupon 6.75% coupon for example). There are several tranches of Sr Sub notes beneath the secured debt. The near-in 2026 and 2027 Sr Sub notes tend to have coupons in the 6%-7.5% range. The 4.875% Sr Subs of 2029 are the last tranche of debt in the stack to mature and their second lowest coupon issue. Nobody would call these given the profile of the remainder of the stack.
These days there is a lot of alternative from a fixed income standpoint. I would much prefer AA+ agency notes with similar duration (and similar current yield). From a credit risk perspective, I would also much prefer term preferred stock in CLO equity CEFs like Eagle Point Credit (for example). Interestingly a CLO would invest in the Sr Secured first lien floating debt at the apex of TDG’s capital structure – this is why I like CLOs for credit risk.
The margins and growth potential for TDG’s commercial aerospace business is interesting. I would be much more inclined to view this as a common equity investment rather than a fixed income investment. A way I would consider looking at this would be sell cash covered 20 delta puts OR near the money put spreads on the common on a market selloff. If there is a severe market selloff the implied volatility on this name would probably spike to ~50% thus making the puts very rich.
My 2 cents for what it is worth.
Hello August West – Yup, yup, yup, to most everything you’ve written. I followed up 2wr’s most helpful response. As for “purpose”? Here we are.
Cool name by the way. I feel like it would be landmine-free to talk “parts” with you. However, with Private? Talking “parts” might get dicey if the Moderator is lurking about.
I appreciate what you are saying, “compensate for the risk”, but, good grief, risk is everywhere and when it does arrive, odds are, in most scenarios, I probably won’t see it coming in time anyway. Sounds like the story of every accidental death (and then some) in the history of Mankind doesn’t it? But in this case (“Symbol:TDG5263223 CUSIP:893647BQ9 Bond Type:CORP”) my allocation is currently ~0.104% in the holding account. I hope that suggests I more than have the junk-risk under wraps. My junk-risk is overwhelmingly taken in fund ‘wrappers’ managed by those that know. Always has been till these fiscal and monetary ‘interesting times’ post the worst of the monetary and fiscal covid responses on the financial markets. Now, glad you mentioned “the stack.”
Way-back-when 😉 I first bought into the GLPI capital structure with “Symbol:GLPI4353023 CUSIP:361841AH2 Bond Type:CORP” I thought okay I’m going to get on the front of The Stack to lessen my risk in this new adventure. Based on the cash flow, revenues, earnings, management (what I could glean of it), size of the revolver, asset geographies, and so on, I’m just not seeing cash crunches short of borderline apocalyptic scenarios taking shape betwixt Now & Redemption Day. Frankly, I think I’m taking more risk with “Symbol:LVS4866239 CUSIP:517834AG2 Bond Type:CORP” thanks to the possibility of the War opening a second front/theater/special-operation (what ever you want to call it). But even with that nagging hindsight I’m still inclined to let it roll until Xi stops making sly moves that actually mitigate the chance he throws his hapless subject’s decades of monumental economic achievement in the flaming dumpster-bin of history. As long as he contents himself with ocean-going squirt-gun contests with Son of Marcos I’m keeping my shorts unknotted. Sorry. Back to The Stack at hand. Like old Charlie Munger says though, flip your mental models around. Run’um backwards. 5y+7m+1d remain for 7BDQ9 to the “redemption price”. (I got a pair of flip-flops on older than that! (Teva or OP, but I can’t tell by looking any more :)))
First off, it’s “Stack”, not ‘Static’, right? Even if a back-of-the-stacker (me w/ 7BDQ9) stays back of stack (no new ‘issues’/”tranches” materialize), methinks, I still get the benefit of early warning signs if preceding “tranches” get all wobbly. Suggests catastrophic loss (~defining that as what a common stock can do in a heartbeat since that is what I know) is something you’d have to work at via extreme inattention (for whatever reason) to a achieve. But, is it unreasonable to speculate that as soon as tranches start stacking up behind me, that, then it’s a glide-path to sweet redemption (or something like that if the same conditions don’t flip the call probabilities back against me …) as it suggests the ‘Market’ looks upon TDG approvingly?
As for the agency notes. Boy oh boy! Never in my wildest-dreams (not that I have many of those any more ;)) would I have thought I’d have the amount allocated to the agency notes I do now! If somebody told me back at the start of 2021 I’d start my daily hunting & gathering forays with scans for the longest call-protected FHLB’s, FFCB’s, and whatever’s I can find, I probably would of said something deep like, “huh?” Then again I never would of imagined that by the end of 2021 I’d have gone to cash. No more bonds funds and sold just about every equity too! What can I say, it just stunk like 2008 (only different?). Anyway, don’t miss those open mutual funds at all (except for the 5.3% MM funds of course )! Have to admit as well it was a great excuse to reshuffle chunks out of dyed-in-the-wool mutual fund shops, that seemed to be struggling adapting to ‘the changing times’, like TRP. So yeah, there are times when I don’t feel very charitable toward those that had a hand in all this busy-work they created for me. Then again, I’m up. Up, and with so much less risk, sometimes I have to pinch myself to make sure it’s not a dream. Plus, here I am meeting interesting and smart new people! Cheers.
Hi Caw Caw – good luck to you!
Just started a position in Sinclair Broadcasting Group (SBGI) which is a company that owns a lot of local television stations. Sinclair is currently trading around its 52 week low which seems like a good entry point, and is going ex-dividend (7.75% annual) tomorrow 8/31.
The idea will be to accumulate shares going into the 2024 election season where ad spending drives revenue higher. It may take a few quarters to see the bounce, but you get paid to wait for that to happen. My local Sinclair network was inudated with political advertising last election cycle, and I expect it will again this time.
CW, I like your thesis. Just picked up a small position @ 13.00
Big sell off in Sinclair Broadcast Group (SBGI) on Friday, down 10%+ on 2X volume with no corresponding news/announcements. Now trading at 5 year lows. Some speculation that this move was related to the Charter/Disney fight and/or a hedge fund unloading its position going into Labor Day Weekend. I would add to any position cautiously at these levels, but would not be surprised to see a bounce higher going into Q3 earnings. Big moves like this are why many income investors avoid common shares in favor of preferreds and/or bonds.
It now seems confirmed that the big drop in Sinclair Broadcasting was related to the Disney/Charter fight, as shares of SBGI were up 14%+ on the news Thurs. that Charter and Disney had resolved their differences. Shares immediately reversed direction though, on Friday’s ‘triple witch’ options expiration (-9.85%) which was a bit disappointing because its an indication the shorts are dug in and haven’t given up. Stay cautious on SBGI and caveat emptor!
Sinclair Broadcasting (SBGI) just reported earnings that were better than expected and the share price popped 29% and is currently trading above $13.70. Big question for holders is whether or not to sell the news or hold through the next ex-dividend at the end of the month. I’m gonna be holding this one into 2024 with the expectation of more gains based on my earlier thesis.
An update on Sinclair Broadcasting (SBGI). I have collected two dividends since August and am sitting on an 11% capital gain going into the Presidential election ad spending cycle. So far my plan to hold SBGI for income and capital gains is working out nicely. Analysts are predicting $16B in political ad spending in 2024 which is roughly a 30% increase from the 2020 cycle. Sinclair has also recently inked a series of network distribution deals with CBS affiliates in Los Angeles, Chicago, NYC, and a number of other cites around the country.
One unexpected risk has been share price volatility, with double digit swings in both directions over the last several months. I was able to use the volatility to lower my basis but now have a full position and am less willing to buy the swings. There are also ~11% shares sold short, which is less than prior months but is still quite sizable negative pressure. Q4 earnings will be announced as well as two options expiration dates before the next ex-dividend date at the end of February. All are potentially volatile events.
I have a tendency to sell my winners early and may end up getting bucked off SGBI before too long. However, being bombarded with political advertising while trying to watch the local news would be so much more tolerable if I knew it were going to increase my bottom line. 😉
FYI, Bank of South Carolina (BKSC) is delisting its common stock. One of my purchases from the carnage of March 2020. Although long gone out of my portfolio I will remember its gains fondly.
I spent some time over the weekend looking for an equity that has some income potential and will hold up in an economic downturn. As a result decided to start a position in Kraft Hines (KHC). Currently has a 4.75% dividend and trades near the bottom of its 52 week range. I’d like to hold this into the fourth quarter and am looking for a 10%+ gain including dividends. Not super exciting but certainly doable in a sluggish market imo.
Hope nobody here has MPW. Another horrendous day for that stock. Apparently a report that California regulators having issues with MPW bailing out one of their tenants (Prospect Medical). One of the few California regulators actions (if true) that pig pile agrees with.
Pig, I never owned this, but I have enjoyed PennYlessY and Moron get taken to the cleaners year after year owning this (not anybody else though mind you)….And recommending it non stop on the way down. This has almost been as good as his love and prediction for T to go to $50, lol.
Yes Grid, the Dragon never ceases to amaze me with his glorious picks.
CVS has been touted as an undiscovered value play with a low PE and a safe dividend at a decent 3.4%. It is no longer a brick and mortar retailer. CVS dropped today on the news of the loss of a big client of its pharmacy benefits unit, BC/BS-CA.
There was collateral damage in GoodRX, a CVS business partner, and companies with similar PBM operations like Cigna. There is some concern that other insurers could switch to upstarts like Amazon and others.
Disclosure: Watching from the sidelines.
Sounds like Blue Cross CA is moving to a consortium built around Amazon’s new pharmacy business. If Amazon is successful, then CVS’s cash cow might be at risk. I was listening to a radio interview about it this morning and although I don’t remember the numbers, I remember that the magnitude of the savings to Blue Cross customers could be substantial. Hope it is true.
Disclosure – CVS is the pharmacy manager for my health insurance. I would be happy to leave them, but CVS also owns my health insurance provider (Aetna), so I suspect pigs will fly before Aetna changes pharmacy managers.
Private, I’m still exploring my options for Medicare. One thing I came across was comments about the combined insurance that brokers are offering I think called Medicare advantage. The brokers seem to be pushing it and I was reading that some insurers were overriding the physician recommendations referral and treatment. I suppose to control costs and increase profit. So far with my company insurance with BC/BS of Alabama I haven’t had that problem.
Charles, We examined all the options closely. One thing we definitely decided is we would absolutely, positively not be enrolling in an advantage plan – a decision made particularliy clear after speaking with a few medical providers. But yes, you are about to be hounded via land, sea and air by the sales folks…which should tell you something.
Also keep in mind that if I understand correctly, once you choose Advantage, you do not have the option to switch back if you wish… I’m not 100% certain that’s the case if you initially choose Advantage but if you choose to switch to it after the fact, you’re stuck with it…. Not choosing Advantage was an easy choice for us….. I remember considering a simple example – if I ended up diagnosed with cancer, would I be able to choose to go to Sloane Kettering and also get a second opinion from MDAnderson? Check the Advantage program being offered to see if you could – you mots likely can’t…. If you can’t get the best if you want or need it, then I’ll be happy to pay for classic Medicare and having the peace of mind that hopefully I’m paying for what I’ll never need. Thankfully our son had wonderful insurance pre Medicare days and was able to do exactly that with Sloan and MDA and has been NED for the past 11 years after a rare for of sarcoma with a poor initial prognosis
2WH
An article in the WSJ a few years ago stated that the only way out of an Advantage plan was to move to another state (and sign up again),
My wife and I have been on Medicare for a few years and chose traditional and the Medigap supplement. We like being able to choose our doctors.
We’re using HSA funds to pay for most of the charges. Note that HSA funds can be used for everything except the Medigap premium.
Greg – that article would be wrong then. You can switch from a Medicare Advantage plan without moving out of state. The rules are detailed but you :
1. can change once a year during open enrollment
2. If you want to change plans mid year, you can switch from your current Medicare Advantage plan to any 5 star rated Medicare Advantage plan at any time during the year (once a year)
3. You can even move from a Medicare Advantage plan back to regular Medicare and Medigap supplement during open enrollment but the catch here is this switch requires medical underwriting – so if you are switching because of severe health issues, it likely won’t happen or be extremely expensive
Maverick
Perhaps the WSJ article was looking at getting around Option #3 when you have significant health issues.
You are not stuck with any Advantage Plan. Make any changes you want at the end of the year. Under some circumstances anytime.
This topic is not investment related.
I have Medicare/Medigap. I like it because I don’t need referrals and can change doctors. I also like it because it saved my life. That is a good selling point.
Choice is important. Patients don’t leave doctors, but doctors leave patients. A specialist I use retired so I will be assigned a new doctor. Will I like him or will I want someone else? I don’t know. With Medicare I am free to shop.
The local general practice I use is now corporatized with high turnover. My family doctor is long gone. I get a new inexperienced doctor every 12-18 months, each a stranger to me. Nice guys, but they misdiagnose. This is a profit-driven operation. Specialist issues are only referred within their corporate hospital network, which often requires a drive.
Recently I had an emergency. I walked in to my local GP, which was empty. The senior doctor was alone at his desk. I thought I lucked out. I could not have been more wrong. They said they couldn’t see me, however their corporate affiliate emergency care clinic would be glad to, a mere 15 minute drive away. No doctor spoke to me but the receptionist helpfully commented, ” Maybe you ought to go to ER, sounds like a nasty problem,” (It was.) (Anger: Ain’t no way I’m driving 45 highway minutes to the ER at their corporate hospital.)
Later I drove to the ER at the local University Hospital, 5 minutes away on local streets. Which was nice enough to save my life. (Short medical diagnosis: “It’s very bad.”)
Where you get a skilled surgeon who looks like Teddy Roosevelt and immediately instills complete confidence at 3 or 4 on a Saturday morning, I will never know. Who needs the cavalry when you’ve got The Rough Rider? I was happy to be in good hands at a place of my own choosing. Whatever the result I was happy to control, in some small way, my destiny.
The costs were high, but all the costs were covered by Medicare/Medigap. No worries about referrals, in or out of network, co-pays, etc.
I will be looking for a new GP. I am incredibly happy that I can shop around. Thank you Medicare. Just my opinion.
Some doctors don’t accept Medicare/Medigap. Some doctors don’t accept Advantage Plans or only accept certain ones. A friend uses a doctor that does not accept medicare or any other plan. I don’t need a referral with my Advantage to use a specialist. I can use doctors out of the network but the cost might be higher. I can switch doctors anytime I want. Figuring out the actual cost of each plan based on an individuals future needs is impossible for most of us. Hospital cost are the most difficult to understand. Also the plans vary depending on the county of residence and insurance company providing them.
Investing is easier
Re “Figuring out the actual cost of each plan based on an individuals future needs is impossible for most of us.” Amen!
You do realize that with some Medicare Advantage plans, you don’t need referrals and can change doctors. And those same Advantage Plans and doctors can save people lives.
That is why I said one needs to research the plan and the network. Now granted I have a wealth of health insurance knowledge given my work experience, but it isn’t any harder to research a network and coverage using some of the online tools available than it is researching good investments.
Some Advantage plans are structured as HMOs, some as PPO’s. Most in my area no not require any referrals – you can go to any doctor and hospital you choose in the network (which is vast and as I noted, includes every single hospital and doctor in our University Health Care System)
Shoot, reading your story, your issue is not what medicare supplement policy you have. It is that you made a choice for a Primary Care Practice that doesn’t sound like it fits your needs well. I would suggest since you are looking for a new PCP anyway to investigate the PCP practices affiliated with / owned by the local University system since you seem quite happy with the University Hospital
And I bet if you looked, I would not be surprised that there are Advantage plans in your area that include said University hospital and its related physicians
Hi Charles,
I am not quite old enough for medicare (for a few more years), but I saw this
https://fortune.com/well/2023/08/09/pros-cons-of-medicare-advantage-plans/
Seems like the advantage plans are a lot more restrictive (they have to cut something to be cheaper).
I think a lot of brokers push it because they get paid more for selling them.
One of my neighbors tells me that if you have been on an HMO and liked it, you might like an advantage plan. Not all advantage plans are HMOs, but he said all have lots of rules and “processes” above regular medicare.
I am not looking forward to having to figure it out for us.
Well, I could fill several pages about the pros and cons, from the perspectives of a retired provider, and now a regular patient (and resident of NorCal). There are certainly advantages of Advantage programs, especially if you’re generally healthy and are already part of an HMO you like (e.g., Sutter or Kaiser). After turning 65 in 2016, I could have moved seamlessly into one of those, but at the time, I lived across a county line where the same program wasn’t available that year, so I moved into a traditional Medicare plan plus a supplement (costing a good deal more than Advantage). As a patient, I had had good experiences with my HMO (including spine and cancer surgeries) and was a bit unhappy with my new situation….until I was diagnosed with a serious, but uncommon, condition. With traditional Medicare, I was able to be seen at one of the major University centers (a coin-toss between Stanford and UCSF) without jumping through any hoops. If I’d been in my old HMO/ Medicare Advantage (which was later offered in my county), I would have had to request prior authorization to be seen there, which might or might not have happened, and request it every time I needed a follow-up. At this point, I’m happy to pay more in the short run to be seen, without hassles, by sub-sub specialists who are quite knowledgeable about my disease.
Just my 2 cts.
Thanks CR and everyone else who responded. This gives me a little more information to go on. Every little bit helps.
Charles – I worked for 10 years as a VP in a large University Medical Center. Later I and a group of other CFO’s in educational institutions formed an in essence self insured health care consortium and we would meet monthly with various reps to stay abreast on everything. So I have extensive knowledge of health insurance. That said, when the time came a few months ago for my wife to sign up for Medicare, I still reached out to one of the brokers I was familiar with from my consortium days because there are tons of options with Medicare
Basically, your choice will likely come down to either
1. Regular Medicare with a supplement plan (Medigap) (and there are a variety of options on supplements, from drugs only to everything)
2. Medicare Advantage plans which are an all in one solution
With 1 – you typically have more flexibility to go wherever you please for care. The con is the supplements tend to be costly
With 2 – the benefit is they can be a great value. The potential downside is they may have a limited network
I have seen several people here say they would avoid Advantage plans. Sorry, to me that is bad advice. You should consider Advantage plans depending on how comfortable you are with the network. This will vary from state to state and even county by county. There is no single answer.
I can tell you, my wife (who worked 40 years at the large University Medical Center System as a nurse in our area) and I analyzed it and choosing an Advantage plan for her was a no brainer. Why?
First, it was not only the same network of physicians and hospitals we have been using for decades (all the University Medical Center hospitals (over 20) and physicians (over 2000) we would only want to go see and who we currently see, but it also included the other large network in our area as well.
Second, the cost could not be beat – my wife pays $35 a month for her Advantage plan beyond the basic Medicare cost everyone pays – for far better coverage than Medicare provides. And far cheaper than a Medigap supplement would be
Third, her Advantage plan has added “free” benefits – including very well covered Dental Coverage, a $125 a quarter allowance on a prepaid debit card for deductibles and coinsurance. a $120 a quarter allowance to buy OTC medical supplies from CVS, etc. When you take those into account, they more than offset the $35 a month premium – so its like we are getting it all for free
Now you also need to assess your current healthcare spend and needs. Someone with a ton of medical issues and drug costs may be better paying a lot more for a regular Medicare Supplement instead of an Advantage plan
But you really need to investigate what is available in your area as it will vary a lot. In our area, we basically have two very large health care networks. One is the very well known University Medical Center System. the other is also a very good Blue Cross owned health care system. Both have very good hospitals and doctors. I would say 90% of the hospitals and physicians in our area are owned by one or the other. Each offer their own Advantage Plan (but allow people to use the other’s network). Then some national insurers like Aetna and US Healthcare offer their Advantage plan encompassing both networks as well. So it is really an easy decision for us given all the benefits an Advantage plan provides.
Even for those complicated cases like cancer, transplants, rare diseases – the local University system is in the top echelon of options across the country. When I worked there, we had patients come from not only all over the country, but some worldwide for specialized care
So bottom line is there is no singular answer. It will vary greatly based on what networks and options are available in your specific area.
And honestly, Medicare.Gov for being a government run website has a very good comparison tool of options in your area you can use as a starting point by inputting your physicians, medications, etc and getting cost estimates
Thanks Maverick, being in the business really helps I see. Some of these medical companies cover large areas and are expanding. I’m supplying a Kaiser job today and I bid on an HCA expansion in Bakersfield yesterday.
Power is out here so I have to get started earlier today.
Medicare Advantage Plans are entitled ‘Medicare PART C’ .
Just a personal observation. We were CVS customers for decades, but I did not like going there. Organized chaos in the store we used. Never ending change in personnel. etc. When the pharmacy benefits manager changed, our health insurance provider requested we move from CVS. We moved to a pharmacy in a local supermarket we frequent. NIGHT AND DAY from CVS. Calm and organized with better pricing. We are pleased. Too many major healrh providers are simply too big to operate efficiently, including physician’s offices and hospitals in our area. Just too much bureacracy. My opinion.
It looks like Aerojet-Rocketdyne’s AJRD acquisition by L3Harris Technologies (LHX) will likely go through in the near future. They are about the only maker of solid rocket motors for the military (air defense, air to air, anti-tank, missile based artillery, etc.).
DoD has said it won’t oppose, anti-trust has cleared. LHX has promised DoD not to play favorites among defense contractors, all good progress.
Purchase price is $58. Has been trading a couple of bucks below that. I bought some last year when the west started supplying the Ukranians thinking it might be a good appreciation play.
A well-researched and informative article by Barron’s on Florida’s complicated home insurance market. (May require subscription,) In the interests of keeping this post under 100,000 words, I will sum things up by saying that I think Florida under prices risk.
I am generally long re-insurers and generally happy there. I owned a Florida home insurer pfd but exited. Started out insuring churches. Paid a high, steady divvy. SPAC-ers took it over at the height of the SPAC boom, unloading the by-then home insurer for paper. The sold-off insurance units filed for bankruptcy after the last ‘cane. The deflated SPAC trades for ~1.50.. They should have stuck to churches.
Florida’s Insurance Market Is a Hot Mess. Homeowners Are Paying the Price.
https://www.barrons.com/articles/florida-homeowners-insurance-costs-climate-change-78d333f9?mod=hp_LEAD_5
Just my opinion.
Good results from Schwab today. I bought during rout. LNC is now around $26;bought during rout.
Frightening to make these purchases when CD’s looked comforting. Yet, CD’s after tax don’t even keep up with inflation.
Long way to go before out of the woods but these equities pay great dividends esp. on my basis.
I benefit due to my birthplace and fellow Americans!
Does anyone have any experience with TD’s fully paid lending income program with common stocks? Sounds too good and easy to be true.
While I do not do it on TD.. I do use the same program on Ally. They borrow out anything I own and pay me monthly. It was pretty lucrative with preferred and BBs for a while but has now settled down. You do not even really notice you are in the program except when some money comes into the account for the lending.
IB has one and it works fine for me. Just curious, does anyone know if Schwab and Fido have similar program?
I thought auto parts was a “can’t lose” business. New cars are way too expensive, so keep and repair the old jalopy. Then I saw the Hindenburg short report on Icahn where there was a mention of Icahn’s failing auto parts business. The Icahn parts business soon filed for bankruptcy. That was a early canary in the coal mine.
News today is Advance Auto Parts is dropping ~30% on a dividend cut and a guidance cuts, dragging down related stocks.
So much for safe stocks…Disclosure: missed the falling life here.
Bear, the character Mike Campbell in Ernest Hemingway’s 1926 novel The Sun Also Rises was asked about his money troubles and responded with a vivid description embracing self-contradiction: “‘How did you go bankrupt?’ Bill asked. ‘Two ways,’ Mike said. ‘Gradually and then suddenly.’” 🙃
We are witnessing more “suddenly” today due to mismanagement, toxic debt, hubris and overspending. I would also contend that Congress has a severe SPENDING problem and not a revenue problem http://www.usdebtclock.org
Auto parts stores are WAY overbuilt in our locale, some competitors here only a few blocks apart. I have no idea what managements are thinking.
I hate auto parts stores. They don’t carry much inventory anymore, they do it all from central warehouse that “will have the parts here in two hours”. They hire some folks that no nothing about the inner workings of engines. Sure they can put on wipers for you but c’mon folks so can WalMart. Rock Auto online is much easier than dealing with parts stores if you can wait a couple days.
Grateful. Just arrived in Hungary. Saw the news on NVIDIA. Thankfully, I never took my profits. My original basis is around $50. I will continue adding small amounts every month. I believe this will be my next Microsoft. We are blessed to live in a country where we can invest in these life changing companies.
TNT, let me know how it is and if you come across any must visit places around Bucharest. Me and the wife are going in The fall
It’s Budapest, Bucharest is Romania.
NEWT – For what it’s worth NewtekOne will be going into both the Russell 3000 and Russell Micropap Indices – https://seekingalpha.com/news/3974779-newtekone-alpine-income-to-be-added-to-russell-3000-rocket-companies-to-be-deleted
and
https://seekingalpha.com/news/3974761-newtekone-industrial-logistics-to-be-added-to-russell-microcap-corenergy-to-be-deleted
Most of the supermarket business stories I see are about Kroger. Here is a Barrron’s story on the little-known parent of some familiar regional grocery chains, like Stop and Shop, Hannaford and Food Lion. The company is Ahold and it also operates in Europe. Its ADR ticker is ADRNY. (Ahold’s full name is a mouthful, Koninklijke Ahold Delhaize N.V.) Year to date, up 14.4%.
FreshDirect Is Getting a Hand From Lower Inflation. Play Its Dutch Parent’s Stock.
https://www.marketwatch.com/articles/freshdirect-is-getting-a-hand-from-lower-inflation-play-its-dutch-parents-stock-efc0042?mod=mw_latestnews
The grocery industry is intensely competitive, with Amazon, Walmart and Target also in the business. DYODD. Long.
Sending this as a reply because I don’t know how to start a new thread. While JXNprA is interesting, I thought the common was more appealing and started a small (so far) 1% position with the common. Using their latest reduced earnings, there still seems to be adequate coverage of the 8+% yield. Thoughts?
I did likewise for LNC. Last earnings call she said they had the cash for dividends so I had bought at above 8% yield. The stock is fairly stable and I don’t expect any capital appreciation for a year. I also bought the D preferred. Interesting article in Bloomberg on Apollo and Athene. Being Athene drives profits for Apollo. Article spoke of softness in insurance but mentioned unlike banks, customers don’t rush to withdraw or move their policies.
If QQQ wasn’t on a tear I would put more into insureds. It is all I can do to resist adding more to my NVIDIA, MICRO but I am not taking gains off the table to redeploy. No need to pay taxes.
These are a fair ways out from hitting new lows as we are not in a full blown recession yet and investors haven’t completely given up hope. Watching WHR and WY for later this year.
I started a position in Alexandria Real Estate this morning. It is a REIT that specializes in providing research facility spaces for high tech in places like Boston, San Diego, Silicon Valley et cetera. It has been hit hard- apparently on fears that some of their renters may have banking issues. With the Feds assuring depositors that they will be covered for any deposit in excess of 250k, I thought it worth a flyer.
Nice thought on ARE and it’s selling at ~it’s one year low price and stripped yield of ~4%.
VZ new lows here @ 7% yield. Wondering if street is pricing in a divi cut this year or merely QT effect.
for anyone interested in diversified energy (ng/LNG/oil etc) I have been building a position in WDS Woodside, the big AUS o/ng firm that took over BHP’s o/ng interests; big presence in US (Gulf) and of course AUS with development. Anyway it goes XD tomorrow 3/8 $1.44 US so whether or not you want the div (have to buy today of course before the close) that is important short term. They have a long runway to Asian energy needs. There is no tax to US investors, the div is ‘fully franked’ meaning the co has paid the tax. Of course not a recommendation, DYODD, I have been nibbling in energy for the first time since 2015 in WDS, CPG and Cortera (CTRA) ..all w good return to shareholder strategies. fyi, lots of info on SA on these names…sorry to post so late, busy day (for the folks who want that div. )Bea
Thank you for the post. WDS has been on my watch for a while now. Like you said, plenty of catalysts.
Any thoughts on VZ? The stock has been in a nasty downtrend, so I am not a buyer but just looking for others opinions.
WSJ article on PE firms and annuity companies. Mention of Blackstone, Carlyle, Centerbridge, KKR, Apollo / Athene. Annuity companies have had difficulties matching investment returns to policy obligations.
“Insurers have piles of cash from annuity payments and insurance premiums but many have been struggling for years to get good investment returns in bond portfolios they manage themselves.” — (“Private Equity Taps Insurers’ Cash to Speed Up Growth. “Blackstone, Carlyle, other fund managers reach deals with insurance firms hunting for better yields.” https://www.wsj.com/articles/private-equity-taps-insurers-cash-to-speed-up-growth-11675128742)
Some PE firms are buying or establishing annuity companies. Others are repackaging lower-rated debt into complex higher-rated debt and selling it to insurers. (“Insurers are happy to buy.”) A sequel to a movie we have seen before? One reader noted that there was only one mention of “risk” in the whole story.
Just my opinion.