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  • Retirement Portfolio For Dummies - The Transportation Components [View article]
    Munibill wrote: "But what if, .... what if the future is remarkably unlike the past ... in terms of growth of GDP components? For a long time? What makes growth inevitable?"

    This article contains data for the last ten years with projections for 2014 and 2015. I would not assess that period as one of atypical growth. It is a record for periods that were the worst of times, and periods that were less than average. I would expect the future to look a bit better than our recent past.
    Nov 25, 2014. 03:20 AM | 1 Like Like |Link to Comment
  • Triangle Capital Has A Growing Non-Accrual Problem [View article]
    The point about selling pressure from 'tax loss selling' is one well worth bringing up.

    For the dividend paid during Q3-14 - "The record date for both the regular quarterly dividend and the supplemental dividend was September 10, 2014, and payment date was September 24, 2014."

    This information suggests that the dividend paid in Q4-14 will have a record date of December 10th. Subtracting three days for the settlement period, that pushes the date forward to December 7th - which is a Sunday. So the first 'day after' for those selling as late as possible to capture the Q4 dividend might be December 8th.

    TCAP began 2014 at $27.65 and closed today at $21.70. Dollar amount loss = 5.95 and percentage loss (595/2765) = 21.52%. So the size of the loss (using a purchase date of 12-31-13) is big enough to cause tax loss selling. But heck if I know what the average cost basis might be for a current TCAP share holder. 2013's beginning price was $25.49. 2012's beginning price was $19.12. There may be a majority of current share holders who would still be selling at a gain.

    Going by a logical projection, I would say that a 10.87% yield (using the $0.59 quarterly + supplemental dividend) should cause most TCAP investors to hold through this rough time. But there is a threshold of pain where investors stop being logical. Some of those looking at the losses of 2014 may not remember that their basis is higher. Some are waiting for one last dividend before they sell. Some are waiting for one more dead cat bounce that should come as the dividend 'date of record' approaches.

    In summation -- even now that the news (about non-accruals) is old news - there are still reasons to expect continued price volatility.
    Nov 24, 2014. 07:38 PM | 2 Likes Like |Link to Comment
  • Simple Math At Genesis Energy: Gulf Tailwinds Plus Distribution Increases Equals Buy [View article]
    I own units in GEL. I like GEL. But the author failed to mention two big negative attributes. GEL has a poor history when it comes to DCF projection accuracy. In any given year, falling DCF projections result in an under performing stock. Bond ratings are highly correlated to earnings projection accuracy. And GEL has a low bond rating.

    A near 5% yield that is heavily tax deferred plus a near 10% distribution CAGR projection makes GEL a nearly perfect stock for retired investors. But oscillations in DCF projections will cause GEL unit holders to have a bumpy ride. One's current holding would need to be heavily invested in equities with investment grade ratings before they should be pondering a purchase of GEL.
    Nov 24, 2014. 12:37 PM | 3 Likes Like |Link to Comment
  • TCRD Issues New Baby Bond - 1st In 2014? [View instapost]
    I am not aware of any "intro to baby bond" reference source. Any one person can have a definition that varies from mine.

    That said, it is my perception that baby bonds pay interest four times a year. The new ARCC 'notes' pay interest twice per year. The new ARCC notes will be issued "in denominations of $2,000 and integral multiples of $1,000 in excess thereof". Baby bonds are issued in units of $25.00. And baby bonds trade on the NYSE. There is no mention of where the ARCC notes will trade.

    Going by memory, I believe ARCC declared their intention to list ARN, ARU and ARY as baby bonds at the time of their offering. ARCC has not done so with this new offering.

    The largest offering size of any ARCC baby bond is $200 million (tied with PSEC's bond PRY for the largest baby bond in my coverage universe of baby bonds). This offering size is - initially - $400 million.

    In summation - I would not call the new ARCC notes "baby bonds". Concerning everything else you wrote above - we are in agreement.
    Nov 19, 2014. 01:06 PM | 1 Like Like |Link to Comment
  • BDC Stats 11-14-14 - 1st Update With (Many) Q3-14 NAVs [View instapost]
    Blazar - thanks for the notice. I have already updated the data above (but only in the first spreadsheet) to make note of the name change (Yahoo was still generating output for NGPC). This change also resulted in a small change in the price. I have input the fresh NAV in my data. NCPC Q2-14 NAV was $8.57 while the fresh Q3-14 NAV from OHAI is $8.11.
    Nov 18, 2014. 03:28 PM | Likes Like |Link to Comment
  • Packaging Update 11-14-14 [View instapost]
    (1) The beginning price target is the average price target one finds at Yahoo Finance.

    (2) RRRs are always heavily based on bond ratings. For sectors where I can "earnings projection accuracy" stats for five or more years, those numbers can result in adjustments to my RRRs. There is almost always a very high correlation between those two metrics. And there is 'fundamental' information (like the percentage of fee based income for MLPs) that go into a risk assessment.

    I do not factor in items like those with PAA and SEP on "DCF available to the limited partners" into a RRR assessment. I lack the accounting skills to quickly judge each company on their earnings presentations. Given the size of my coverage universe in so many sectors, that task would eat up all of my time.

    (3) There is no single source of MLP DCFs. I edit out brain farts to make an average number from the projections made by eleven brokerages. This is a labor intensive task no-one else is attempting. The distribution to DCF ratio is such a meaningful number (in the generation of a CAGR projection) that the labor is worth the effort.

    I like and heavily use Yahoo Finance as a source for metrics - but the Yahoo CAGR projections for MLPs are garbage. I am amazed by the stats collected by David Fish in the CCC list. The CAGR projections that he does in non-MLP sectors is a major input into my CAGR projections in non-MLP sectors. But the CAGR projections for MLPs in the CCC list are garbage. The CCC list CAGR projections for EEP, EXLP, GEL, HEP and NGLS are off by a mile -- and in some cases off by a factor of ten.

    One can find a ton of articles on dividend growth investing. On the other hand, most of those articles do not even make an attempt to size the amount of dividend growth. It is hard to find articles on dividend CAGR assessment. It is rare to find articles with good CAGR assessments.

    Mentions of earnings projection accuracy are almost impossible to find. How can you do a CAGR assessment based on earnings projections with variable levels of accuracy? You have to have a RRR assessment to do that! How can you determine the level of goodness that is priced into a stock without a RRR? You can't!

    Given those two conditions, readers are not prepped by prior articles from other sources that relate to anything that I am writing about. On the other hand, one needs to be prepped to understand what I am writing about. One can be prepped if they have read about dividend discount models. And one is prepped if we share the same intuitive perceptions.

    Everything I am writing about is intuitive. There are only two general forces influencing the valuations of equity income investments: growth and risk. Everyone knows that growth is a number. But risk can be nebulous - while at the same time, risk can be binary. Almost everyone gets uncomfortable hanging a specific number on risk.

    I am using a different language (CAGRs and RRRs) to make my valuation assessments. I expect that it is the 'difference' that makes my writings difficult to understand.
    Nov 18, 2014. 05:39 AM | Likes Like |Link to Comment
  • Transportation Sector Update 11-01-14 [View instapost]
    Warren Buffett said in the 90s, ‘Stay away from the airline industry’. He shuns the airline industry in general, as it is a high fixed cost and highly competitive industry that has on the whole made negative returns for its investors.

    That perception is probably no longer true. But I grew up (as an investor) with an anti-airline bias based on that old Buffett perception. I have self-generated biases against mortgage REITs, propane MLPs and "retail".

    There is a huge emotional component to investing. One can see the right thing to do and still have trouble pulling the trigger on the right decisions. Valuations are strongly based on growth perceptions -- and all growth perceptions are volatile. The setting of CAGRs involves generating a picture of growth in neat, stair stepped increments in a world where such neatness never exists. That level of Fear, Uncertainty and Doubt (or FUD) is true even when investing in sectors (and sub-sectors) that one loves. One could incorrectly see the setting RRRs as the process of metrically justifying a quantification of FUD attributes. (The correct perception would see RRRs based on Uncertainty alone.)

    I do not believe I could objectively set RRRs and CAGRs for a sub-sector where I held a bias. So I do not even try.
    Nov 16, 2014. 08:15 AM | Likes Like |Link to Comment
  • Triangle Capital Has A Growing Non-Accrual Problem [View article]
    Friday update - no changes to NII projections or price target. TCAP's price rose 0.09% to $22.54 while the BDCS fell 0.15% on a day when 17 of the 29 stocks in my sector coverage universe were up. I have posted a year to date BDC update for 11-14-14 at my Seeking Alpha Instablog - the link is
    Nov 15, 2014. 12:49 PM | 1 Like Like |Link to Comment
  • Triangle Capital Has A Growing Non-Accrual Problem [View article]
    Thursday update - no changes to NII projections or price target. TCAP's price rose 0.04% to $22.52 while the BDCS fell 0.16% on a day when the index looked out of touch with the sector. The naked eye would cause me to expect the index should have done worse than that. AINV was down 0.48% - ARCC was down 0.24% - FSC was down 0.17% - PSEC was down 0.41% - SLRC was down 2.30%. 21 of the 29 BDCs in my coverage universe had price decreases. Trading volume for TCAP has significantly fallen back to a number that is still above average volume.
    Nov 13, 2014. 07:52 PM | 2 Likes Like |Link to Comment
  • Triangle Capital Has A Growing Non-Accrual Problem [View article]
    Wednesday update - no changes to NII projections. Price target fell to $27.04. (The high target is still $29.00 and the low is $25.00 -- I expect the high target will fall some -- I expect the target will at least fall to $26.00 -- But time is running out - there may be no more changes left to occur.) TCAP's price stayed at $22.51 while the BDCS fell 0.21% due to near 1% falls in ACAS, FULL, SLRC and WHF -- and some BDCs had a good day.
    Nov 12, 2014. 07:20 PM | 1 Like Like |Link to Comment
  • Triangle Capital Has A Growing Non-Accrual Problem [View article]
    Tuesday update - no changes to NII projections or price target. TCAP's price fell 0.53% to $22.51 while the BDCS was flat. (I wanted to have a publicly posted documentation for these changes so that 1- if I were in error, someone could catch it; and 2- so we have a record of this occurence with a 'vetted' record of how fast analyst projections are updated at Yahoo.)
    Nov 11, 2014. 07:26 PM | 2 Likes Like |Link to Comment
  • Triangle Capital Has A Growing Non-Accrual Problem [View article]
    Monday update - I made three projections - so let's track how I am doing as of today.
    (1) I wrote that the analysts EPS projections would fall.
    Since Friday's close, the 2014 and 2015 EPS (which is really NII) projections for TCAP have fallen from $2.13 and $2.33 to $2.06 and $2.24 (as measured or reported by Yahoo Finance).
    (2) I wrote that the analysts price targets would fall.
    Since Friday's close, TCAP's target has fallen from $29.00 to $27.63.
    (3) I wrote that the changes would slowly tumble in.
    It is too early to tell, but it appears that the changes flooded in today.

    I have posted updated BDC stats on my SA InstaBlog - which can be found at
    Nov 10, 2014. 07:57 PM | 1 Like Like |Link to Comment
  • Triangle Capital Has A Growing Non-Accrual Problem [View article]
    We may not be on the same wave length here. I wrote an article for Thursday morning - for a world in which TCAP's stock price would perhaps be falling - and the world needed to know why. On the other hand, the price might be flat due to little change in the NAV. BB&T had yet to publish its downgrade. I was correct in projecting turbulence. I wanted to provide the world a balanced perspective. I had no idea that Seeking Alpha was going to make this a 'pro' article with a 24 hour embargo. I think it was a pretty good article given that time context.
    Nov 9, 2014. 10:09 AM | 1 Like Like |Link to Comment
  • Triangle Capital Has A Growing Non-Accrual Problem [View article]
    RonFrankDHM asked "How long have (I) been invested in or following this stock and how the management has been performing?"

    I began tracking BDCs in 2007 - and TCAP was added to my coverage universe in December 2007. I am not sure how long I have been publicly sharing that data - but it has been several years. I am a former shareholder in TCAP, I am a current shareholder in TCC - the TCAP baby bond of shortest duration. I have posted a number of articles on Seeking Alpha about BDCs.
    Nov 9, 2014. 09:26 AM | 1 Like Like |Link to Comment
  • Triangle Capital Has A Growing Non-Accrual Problem [View article]
    Propicker wrote: " I don't think you grasp the importance of the fact that TCAP is internally managed, the operating advantage that structure provides."

    In the comment section I wrote that "TCAP's NII/TII ratio is great." That is putting into 'metrics' the same thing you are saying in 'fundamentals'.

    Propicker wrote: "I think you failed to provide the fact that the book value went up last quarter".

    Forgive me for going with recall from a faulty memory, but I believe the cause for the NAV growth was due to the secondary offering - and that absent that offering, NAV would have declined.

    I believe my presentation of the data was balanced. I believe I included just the right amount of 'negative'. I did not conclude that TCAP was a 'sell'.

    Q3-14 provided a reminder that subordinated debt is a bit risky. I believe a $23 price target correctly reflects that risk while a $25.50 target does not. (I wish you had stated what the amount of the KBW price target prior to the earnings release.)
    Nov 9, 2014. 09:07 AM | 1 Like Like |Link to Comment