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42 thoughts on “Did You See This?”

  1. I am not a red meat person anyway nor pork (may eat it once or twice a year) but definitely an interesting read. I stick with poultry (chicken, turkey and occasionally duck) and fish (could eat salmon every meal!). The whole issue of the younger generation not wanting to have ranches extends out to farming in general, I believe – at least down here in SE Maryland. All the smaller farms have been bought up by a few farmers who own 1000s of acres each. Not sure this industrialization trend is good for economics or even public health.

  2. Laundry list of my holdings include a big chunk of treasuries laddered monthly out to a year (actually 11/24) pulling in 5.4% avg (that may not last when/if I roll). A bit of some big bank bonds paying roughly 6.5-6.8% YOC/YTM (GS, JPM). Still about 50% of my holdings in these bonds which might change as things mature.

    Then I have the preferreds/BBs including: F-D, RIV-A, KTH, KMPP, LBRDP, LXP-C, EICB, SAZ, MGR, ARR-C, F-D, MS-E, SPNT-B, MBINM, PRIF-K (tiny), AGNCL, LNC-D, ATH-C, RLJ-A, UMH-D.

    I also hold a couple BDCs including ARCC (largest holding, very low basis), TSLX, MAIN (small due to high premium to NAV). For these, I will add covered calls to enhance income. TSLX and MAIN are getting near sell points for me – ARCC is a long-term hold.

    I also have one share of TLT I bought at $82.31. I wish I had pulled the trigger on 300 shares as I was contemplating back then! I did make a few nickels shorting the puts. I also make a few sheckels weekly selling way OTM puts/calls on the Mag 7s.

    Overall, I am at close to +11% on the year so far – here’s looking for that same amount or more next year! My current yield on everything is 6.59% with YOC about 7%.


    1. Yazzer, not sure what to think of LXP-C it’s been a lot lower than what it is currently. Was one I been keeping my eyes on.

      1. Yeah. When it hit $44 and then again at $43 was too hard to ignore at 7.5% yield. That was the time when the sentiment everywhere was: “no more 6% and 7% yields, I want 8% as that is where the market was going.” Greed was getting absurdly high and was a great time for investing. I feel like in the next year the sentiment will be, “I will be happy with 6% yield.” I just own a 1,000 shares, but felt good to get more into industrial and these are keepers and they can pry them from my sock drawer.

        Unfortunately not a lot of preferreds and baby bonds in this space. I probably should start fractional investing and when times like a few months ago occur, I would have invested in tereno, stag, americold, plym (ugg I had a several thousands of plym-a and was sad to see it go). So my regret is not starting fractional investing this year. I talked to my Merrill advisor a few weeks ago, and they are not doing fractional investing. I let them know that this might be the future of investing. My kids do not want to invest how I invest (too laborious) and they dont really want to put everything in some watered down funds either… They like the idea of best of breeds across all the different investment areas as well as across countries.
        This will be my 2024 adventure and probably re-reading some great authors like Chowder and other dividend aristocrat investors and building the process for my interpretation of robo investing. Ha. It is defining the companies to invest in, and every new $1 invested gets split amongst a % I want.

        1. Mr. C, Being I am one who prefers to own your grandfathers preferreds, it was relatively easy for me to switch and “go long” when these all finally dropped to around turn of the century prices. Of course its easier to get aggressive having about half the stash in 5% plus CDs stretching out to 2028. But reinvestment risk is a legitimate risk too, thus motivating me more to hit the buy button past couple months on perpetual fixeds.

        2. Mr C my eyes are bigger then my stomach, or I should say I see a lot of things I would like to buy and LXP was one I would of like to have followed down. But having a beer or should I say Gallo budget and Spottswoode tastes my budget wouldn’t let me buy multiple tranches at 200 to 250 a pop. Maybe I should try your fractional share idea.

      2. LXP-C:

        Yeah, LXP-C had been an interesting hold for me and one in the higher risk pot. My basis is just a couple pennies below $46-even, having averaged down since I first bought it back in March of 2022 because of it’s “busted” status of probably not being called ever (I think the original call date was in 2009 and it’s ‘lived’ since then). I have toyed with selling at times but am not too concerned about it at the moment.

        With 492 shares now, I may look to trim back a little but, will wait as I expect it to recover to back north of $50 should interest rates really stay/trend downward. It reached $65+/share back in 2021 and, while I don’t think it gets that high, $52-$55 is highly possible.

        1. Yaz, just to clarify if not known. It cant be “called”. It can be force converted at a strike price which is way out of the money now. Also in case some just look on Quantum the owner optional conversion has changed. It can be owner optional converted to 2.4339 common shares. Again, still well out of the money for one to want to do such a thing.

          1. Grid, There has been talk on that other site that some of the big PE guys have been looking at buying up a few of the industrial REIT’s
            I think the problem with that is if there becomes a slowing economy and the questions about funding.
            Still as Yaz said this has been a lot higher as recently as a year ago.

            1. Charles, LXP has had takeover interest before and has itself look outward. So wouldnt be surprised to see it happen again. Doubt the convertible multiplier of the preferred would get a bonus. But who knows, it could be extremes from a solid credit upgrade from acquirer to delisting expert market hell. One never knows about these things.

              1. I like LXP-C at these levels, current yield of 7% and room for appreciation as it gets closer to par.

                >They have a solid balance sheet with modest leverage.
                >The fundamentals for the Industrial sector are declining but still very positive. Replacement costs isn’t a factor now but it could set a floor in the future.
                >Lastly, the market believes in the credit as their 6.76% coupon 2028 bonds trade at 104.4 for a YTM of 5.7%.

                I think the main risk is that the pref gets orphaned ALA Cedar. However, I don’t see this as a major risk given there is less incentive to screw over pref shareholders as the Common equity is $2.8bn compared to only $96M par for the pref.

                And they do have “change of control” protection in the prospectus, but it does have some outs. Snippet below.

                ” A “fundamental change” will be deemed to have occurred if any of the
                following occurs:

                1. we consolidate with or merge with or into any person or convey,
                transfer, sell or otherwise dispose of or lease all or substantially all
                of our assets to any person, or any corporation consolidates with or
                merges into or with us, in any such event pursuant to a transaction in
                which our outstanding voting shares are changed into or exchanged for
                cash, securities or other property, other than (a) any such transaction
                where our outstanding voting shares are not changed or exchanged at all
                (except to the extent necessary to reflect a change in our jurisdiction
                of formation), or (b) where (i) our outstanding voting shares are
                changed into or exchanged for cash, securities and other property (other
                than equity interests of the surviving corporation) and (ii) our
                shareholders immediately before such transaction
                own, directly or indirectly, immediately following such transaction,
                more than 50% of the total outstanding voting stock of the surviving

                1. Maine:

                  Regarding the “Change of Control” for LXP+C – you left out the most important part:

                  ” Upon the occurrence of a fundamental change, as
                  described in this prospectus supplement, a
                  holder may require us to purchase for cash all
                  or part of its Series C Preferred Shares at a
                  price equal to 100% of their liquidation
                  preference plus accrued and unpaid dividends,
                  if any, up to, but not including, the
                  fundamental change purchase date.”

                  So I consider the LXP+C preferred protected at $50/share (liquidation preference) if LXP ever decides to go private again. Even the thieving bandits at Blackstone likely could not find a way around it.

                  I was buying more of it below $43 in October and it remains one of my favorite “busted” convertibles. I have a full position now.

                  And if a publicly traded industrial REIT buys LXP, well then you might have another RPT+D situation which has turned out to be very beneficial for holders of that security. Up, up, and away!

                  1. Ahh, RPT-D has now entered the stratosphere. As a clue investor, I have been long gone. The funny thing is that it will likely skyrocket again once the RTF forced buyers show up!

                    “Forced buyers..” just think about that. What a wonderful world..

        2. If it’s of interest, Fidelity is listing an LXP bond maturing 6/15/24 with YTM ~6.63%, CUSIP 529043AD3

  3. Private, China’s pork farming was in the news recently. The article stated China’s population has been eating less pork, yet pig farming has increased. Like the big commercial building developers, the pork growers have borrowed large sums of money that they are finding difficult to pay back. Farms are shutting down as there is still surplus production and profit margins of the processing plants have turned to losses. The government which has been buying the excess and putting it into cold storage since historically this was a major food source is running out of storage.This will affect the demand for imported grain I would think.

    1. Charles, this NPR story might be of interest to you https://www.npr.org/2023/06/26/1184053690/chinese-owned-farmland-united-states
      I own large tracts of commercial and forest land to primarily grow trees 🌲, it’s the best business I’ve ever been apart of. I just sold a bit over 500 acres in Kentucky that I bought late last year. My realtor in the area told me they would get at least triple what I paid last December (I was very skeptical), because I have a completed survey (I paid for and it increased my land acreage) and strong gas/oil rights that are substantial. I really had no intent on selling, but it was just too good a deal to pass up at this time. Maybe the Chinese will be buying up rural tracts (with our money) in the US shortly…
      Wishing you profitable investing, Azure

        1. I guess this could go in Canadian Discussion but since trees are being discussed in light of farming/rural ideas in this feed, I will note I trade Acadian Timber CA:ADN OTC $ACAZF which pays a high q div nearly all of FFO but the Chairman owns 45% of the company and DRIPs 50% of his divs ea q conserving cash(but of course increasing share count.) Not a recommendation DYODD. Maine/SE Canada land etc. A nice yield which is w/holding tax free in IRAs and the stock bounces up and down about US$2-3/yr if you want to ‘catch the waves’. Not a REIT

          We hear about alternative assets all the time but often timber gets ignored- well not by astute investors like AB or even big life insurance co’s like ManuLife (John Hancock)which has significant holdings.

          1. They own my grandfather’s farm that was strip mined. Now planted to quick growing conifers for the local pulp mill.

      1. So what is a good way to get started in the forest land business? Do you need any partners?

    2. Sounds about right, Charles.
      Chinese government has been trying to talk its population into spending more, but the people are reducing their spending and “hunkering down” as the economy continues its downward spiral.

      Gov. action is to try to increase the supply-side of the economy, but only pays lip service to demand (which, in their case, is where the problem is).

      1. One other thought, Charles –
        China has been trying to grow their food export businesses to help diversify. If you look around in stores, you will see more and more stuff from China – esp. canned goods and other things that have a long shelf life.

        When I lived in China, there was a scandal every week (or so it seemed) for some kind of food problem – melamine in fish, adulterated milk and baby formula, illegal additives in a wide variety of products, fake products (somebody was actually making fake boiled eggs – like they slice to put on top of noodle bowls). Always something.

        The gov. would supposedly “improve oversight”, but there is no systematic inspection or oversight. When the press reports on a problem, the gov. will crack down (often executing a few people as examples), but they don’t seem to take it seriously.

        When I lived there I tried to limit my consumption of pantry products (canned, bottled, etc) and any farmed seafood that was produced in China. Luckily, I had an easy way to get things from abroad (I came to the US regularly, and I always flew back with a suitcase of frozen meat on dry ice)- but I didn’t want to risk my/my kids health on adulterated products.

        Now that I live in the US again, I won’t buy food from China. There is essentially no government control/inspection/etc. Even though the USDA supposedly does some oversight, Chinese suppliers are notorious for just making up whatever data they need to get by.

        1. Funny you must be shopping at the same stores I do! I’m also about reading the labels. 99 Ranch and Grocery Outlet helps to keep the grocery bill down.
          Love smoked oysters, but I try to only buy Korean brand.

  4. I hear much of the beef shortage is because of the Chinese. They have purchased wholesalers small and large… And one condition they set is they demand 100% of a farmers pigs/cows.

    The processors can’t get the animals. Production lines are sitting idle.

    1. Have you seen that in print somewhere? Just really curious.

      I have heard that there are cattle shortages, but I hadn’t heard that they were being shipped to China.

      Moving livestock from the Americas to China would be a real challenge – can’t just stick cows in a container. I could see the Chinese buying beef (even whole carcasses), but I don’t know how they would handle live cows at scale.

      We used to see “sheep ships” hauling live sheep from Aus/NZ to the Persian gulf. They are huge, smelly things only operational because of the demand for live sheep in some Muslim countries. Never heard of anything similar for cows – but maybe there is such a thing.

      1. My friend builds assembly line machines. He’s dealing withe them 25% of his time. I think the big culprit he said was Smithfield.

        1. Smithfield is more pork than beef. IMHO, Smithfield is a more complicated topic because of Smithfield’s large market position in US pork production and sales, ownership of familiar supermarket brand names and overseas control.

          The shares of Smithfield’s parent were languishing. Then The Wall Street Journal reported in October that the parent was thinking of listing Smithhfield”s common publicly in the US again. The parent’s shares have since had a ~20% jump. Not my game, but likely to be a 2024 opportunity for the traders and arbs.

          Chinese-owned pork producer Smithfield prepares for US listing – WSJ

          JMO. DYODD.

    2. Thanks for your comment. It caused me to take a deeper look. Beef prices have indeed gone up (although they dropped recently) so in some sense there is a “beef shortage.” I couldn’t find any support for the “because…” part of the comment. If anything the “because” part is “because of farmers. ”

      Farmers are retaining cattle longer to rebuild herds because of a drought in US production areas. This is causing a rise in US domestic beef prices and a drop in exports . The CNBC article gives a short explanation of what’s going on. I couldn’t find any evidence that “wholesalers” are buying live cattle and holding them off the market. (The farmer gene in me wonders, “So what do they do with them?” Cattle tend to be large and need to be fed.)

      Exports to China have indeed increased in recent years, but this year all-nation US beef exports dropped 11% far outpacing the 4% drop in US production. (This suggests to me that US beef is staying home.) China is the #3 US export destination. Most of China’s beef imports come from Brazil. Some of the recent jump in Chinese imports from the US can be attributed to the 2020 relaxation of trade restrictions China (and other nations) placed on US beef because of US cattle diseases.

      “First-Half 2023 Year-Over-Year Changes in Animal Product Export Volumes Reflect Industry-Specific Conditions”
      “Beef and veal shipments were lower due to lower production and higher domestic prices, as drought conditions in the major U.S. cattle production regions since late 2020 negatively impacted the cattle supply.”

      Beef prices are at record highs — how much pricier will your steak get?

      “Cattle herds in the U.S. have been reduced to their “smallest number in decades” as a result of prolonged drought in key cattle ranching states like Texas and Kansas, a Wells Fargo analyst said.

      “In its latest livestock report in September, the USDA maintained its forecast that beef production in the second half of this year is expected to decline by 180 million pounds from August to the end of the year.

      “As cattlemen retain cows to rebuild the herd, there is a much lower supply of cattle to provide beef,” Swanson said.

      “Ranchers typically raise calves and sell them to a feedlot, where the livestock is fattened and sold to meatpacking companies. There, the cattle are slaughtered and in turn sold to retailers.

      “However, if ranchers hold on to the cattle longer, it not only reduces the supply of beef, but also adds on to input costs — which eventually get passed on to consumers.”

      Chart showing Chinese beef imports by country

      — I haven’t looked at hogs.

      — Disclosure: small Ag position, always looking to add. Generally I think publicly-traded Ag-related preferreds and bonds are a better way to go for the average safety and income-oriented Little Guy investor. (High rollers are in a different class.) Commons and Ag ETFs can offer big returns but have more volatility. One of those accredited investor ” buy a Texas steer” programs turned out to be a Ponzi scheme.

      — I think its a good idea to pull up a commodity futures chart before buying anything on the basis of an expert or pundit urging you to buy into the latest “can’t lose” rally in corn/soy/eggs/cattle/cotton/hogs/fertilizer/ tractors/farmland/etc JMO. DYODD.

      1. Bear, thanks for sharing your hard work. Can I ask if you remember the buying spree the Japanese went on with all those dollars they accumulated? They took over the car market after the 70’s oil embargo with well made, fuel efficient cars and trucks kicking Detroit’s fanny with those big gas guzzling cars and trucks that had body panels a mile wide. What did they do with all those dollars? being a small island, and not everyone there owns land or the opportunity to, they invested in Real Estate. Golf Courses, commercial buildings, etc. this all got sold when their country entered a recession. They wanted those dollars to support their debt.
        So, where am I going with this?
        What is happening with China right now? As much as they dislike the dollar and have been hoping to replace it as a world currency they need those same dollars to support their debt. They are going to be selling American investments to get those dollars, maybe even at a loss.
        Look at my comments. Before you said anything Bear,I envisioned the possibility that the pork industry would be selling Smithfield to cover their debts.
        I had already decided I might buy shares if they did. DYODD
        FYI, Azureblue is out of my league but if I was him I would be looking at any timberlands they plan to sell.

      2. We got wrangled into a helping set up a deal years ago to help a group of Chinese companies import a lot of hides from the US.

        They had been trying to make a go of their leather businesses with hides from Brazil. We helped them do some studies that showed how much those “cheap” Brazilian hides were costing them in labor and quality because those cows lead “tougher” lives and ended up with a lot more scars/damage in their hides than US hides.

        Hadn’t thought about that deal in a long time.

  5. Thanks, very interesting read. Wasn’t sure why they were comparing natural gas and urea prices to caulk in New Orleans though, so I googled DAP and that cleared it up 🙂

  6. An interesting read. Thanks for posting Tim. The section on THE U.S. ECONOMY AND MONETARY POLICY particularly caught my eye. Most folks seem to think the economy is in the toilet!

  7. “Beef packers will continue to struggle with shrinking supplies of available cattle.” (p.11).

    Lots of ranchers hanging up their spurs, but not a lot of young people wanting to raise cattle. lots of silly regulation from the feds, and (in the west), ongoing efforts by the “environmental lobby” (really, the anti-rural lobby) to get the feds to reduce grazing leases are making it hard to make a living raising cows.

    1. To the rescue with some cattle- in a year or two. My son is developing a 120 ac parcel up the mountainside not far from here. Not easy, not cheap, but he developed working knowledge over a few years at his mom’s ranch before she sold. He has actually been getting assistance from federal programs- including re-seeding after big fires in the area.
      Has water & mineral rights, with a nice creek– I’ll be sniffing for the yellow metal ;-))
      Luckily, he has a good business with good employees here (non-ranching).

    2. ranch programs where I live (KS) are popular, but wages are depressed compared to, say, milling grain. the real struggle is capital. if you think BBB preferred shares are gambling, raising cows as a poorly financed young person really looks like gambling – and the returns are not aligned with the risk. we do nothing on our farm except grow capital gains.

      1. Sonoma county was known for dairy farms, very few left. Between the hard work, meeting regulations and finding help it’s a hard life. Never able to take a vacation. A lot have been converted to vineyards. Just the past 2 months poultry farmers have killed over 1/4 million birds due to avian flu.

        1. Charles M, Here in Orange County NC we are down to just one dairy farm left with 500 milk cows. In 1960 there were 100 dairy farms. It’s hard work and as the current owners aged out their children were not interested in the dairy farm life. Orange County is also on the edge of the Research Triangle in North Carolina and the eastern side of the county is booming. The triangle is one of the economic hot spots of the US economy and the best crop on a lot of the former dairy farms is houses. I live in orange county, specifically near Chapel Hill, which is a university town and home to the University of North Carolina (UNC), the oldest or one of the oldest state universities. (Several state universities claim they were first!) UNC was established in 1789 and the first students arrived on the new campus in 1795. Interestingly one of the last dairy farms near to my house closed and was sold. It is now being planted in 250 acres of grapes!

          1. here in SW PA we had a lot of dairy farms, used to visit a close friend of family’s farm a lot, see the cows being milked, cats everywhere (for the mice!) ..well there are very few left and those that hung on and did not sell for home developers got HUGE paydays at the height of Marcellus/Utica rights sales for their NG from EQT, Range Resources et al. I was wholesaling ins prods at the time and advisor for these people were setting up trusts left and right for millions of dollars.

            So they loaded up the truck and they moved to Beverly..Hills that is, swimmin pools, movie stars..

            score: gas companies 1, cows 0

      2. I chased cows quite a bit as a kid – even worked roundup every year. Great experience, but ranching is a hard life.

        Still have folks in our clan who run cattle (and a few who run sheep), but its hard to watch them struggle year after year. Most of their kids won’t take it up.

        Tried to get my boys to go work on those ranches during the summer when they were teens, but no luck. Maybe it proves they are smarter than I was.

  8. Thank you! I don’t read enough about agricultural and rural economic issues, and I found it really valuable.

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