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Ahab McBathsalts
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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: Baby_Hitler]
#26524995 - 03/09/20 05:02 AM (3 years, 10 months ago) |
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I don't think it's too far away. Like another 10-15% after today. We could be there in a week or two.
-------------------- "Nobody exists on purpose. Nobody belongs anywhere. Everybody's going to die."
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Ahab McBathsalts
OTD Windmill Administrator




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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: Ahab McBathsalts]
#26524997 - 03/09/20 05:05 AM (3 years, 10 months ago) |
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Unless of course the 10 year turns negative. Then the shit hits the fan for a second leg lower.
-------------------- "Nobody exists on purpose. Nobody belongs anywhere. Everybody's going to die."
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BayerPhi
Always Learning


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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: Ahab McBathsalts]
#26526055 - 03/09/20 07:48 PM (3 years, 10 months ago) |
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Go long boys. We're skipping this dead cat across the pond before she sinks.
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geokills
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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: BayerPhi]
#26528245 - 03/10/20 09:52 PM (3 years, 10 months ago) |
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Put on some May MSFT calls today, alongside another light helping of Apr UVXY puts. I'm not expecting much, but with how oversold the market became this week, I would expect some reflexive upside movement into the weekend, albeit quite volatile along the way (case in point, S&P futures are already down 2% ).
Keeping expectations low. At the very best, I could see the Monday lows containing a sideways trading range for a number of weeks. Continuing to head lower after a brief respite that sucks in the optimistic bag holders for the next round of institutional unloading is not out of the question either. Stay vigilant and don't be too confident. Manage your risk diligently through disciplined entries and adherence to stop losses, or (as most people should do) just sit it out until things calm down and there is more clarity on support levels.
There is a lot of overhead resistance from the "house of pain" investors who want their money back, which will in turn make any lasting upside movement difficult as that cohort sells into strength to feel some relief. SARS-CoV-2 is, in my opinion, less of a concern than the media is leading many to believe with regard to personal safety for younger populations (however its economic effects are likely to be considerably more significant). I am suspecting that into May, the warmer weather will further reduce contagion rates and this will become another endemic seasonal infection that humanity has to deal with, but as we learn from it, it won't cause the mass hysteria and panic response we have been witnessing of late. An oil price wars will remain problematic, but it can be somewhat sector specific, as lower energy costs can boost consumer sentiment and spending, even as it may hurt the companies that extract and produce petroleum products.
Because there are so many moving parts right here, the market will likely remain erratic and difficult. If you can't wrap your head around your trade, don't take it.
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today mylove



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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: geokills]
#26529393 - 03/11/20 03:59 PM (3 years, 10 months ago) |
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https://twitter.com/allisonmcneely/status/1237818190069194753
This concerning at a time like this, or precautionary? Suppose time will tell. Agree there is a looot of fear about.
I went to HS with the author of that tweet, interesting way of finding out she's a Bloomberg Journalist lol
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geokills
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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: geokills]
#26530586 - 03/12/20 09:48 AM (3 years, 10 months ago) |
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Pulling my horns in, still sitting on my small UVXY put position, although it's a definite loser. MSFT calls are of course down as well although I will be looking for an opportunity to add to these. Generally coveting cash. The market will likely bottom before the epidemic shows a real turn, but in the meanwhile, we have a lot of indecision, panic and the associated liquidity problems to work through, not to mention the difficult task of restarting a stalled global economy that slammed on its breaks in attempts to contain this outbreak.
It is worth noting that we are probably closer to a bottom than we are to the top at this point. Breadth is about as bad as it gets. Stocks above their 40 day moving average is 1.58%, at the 2008 low it was 1.2%. VIX is at 68.41 and rapidly approaching its 2008 high of 89.53.
As markets are a forward pricing mechanism, it is too late to sell. You may incur further losses, but long term accounts should be preparing to accumulate at this point, and if you rode this all the way down and don't have cash on hand to put back to work, don't sweat it, stop looking at your account balance and accept that selling now is almost assuredly giving away money to more savvy money managers who know how to capitalize on panic like this.
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-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
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ManianFH
living in perverty



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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: geokills]
#26531044 - 03/12/20 01:27 PM (3 years, 10 months ago) |
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Thank you for your input Geo.
I have been holding cash for about a month now, and was considering whether this is the correct time to re-position long. The gut feeling is soon - if not now, but that is all on a hunch and guessing at what the next couple of months look like. My technically uninformed guess is that the charts continue to breathe lower over a 2-3 month time-frame, and guessing a perfect entry or spot might as well be a roulette spin.
For now the plan is to soon take a combination of stocks ive been eyeballing based on recent bad press, though I dont think any of them are going anywhere:
Boeing TMobile TSLA - again (at $500 or lower)
-------------------- notapillow said: "you are going about this endeavor all wrong. clear your mind of useless fear and concern. buy the ticket, take the ride, and all that.... " ChrisWho said: "It's all about the journey, not the destination."
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today mylove



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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: ManianFH]
#26531191 - 03/12/20 02:52 PM (3 years, 10 months ago) |
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geokills do you still hold a portion of long only investments that you don't touch regardless of the market movements?
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geokills
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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: today mylove] 2
#26531313 - 03/12/20 03:53 PM (3 years, 10 months ago) |
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Yes, my 3 year old's college education account (which I can only modify 2x/yr) hasn't been touched. My 401(k) is also untouched, although I had had some thoughts about reducing exposure near the end of last year since the gains were so huge. Unfortunately, I decided to let it run and missed that opportunity. My Roth IRA is specifically dedicated to trading, which is where I do the bulk of the stuff I talk about in this thread.
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ManianFH
living in perverty



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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: ManianFH] 1
#26532002 - 03/13/20 01:43 AM (3 years, 10 months ago) |
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Quote:
mick said:
the plan is to soon take a combination of stocks ive been eyeballing based on recent bad press, though I dont think any of them are going anywhere:
Boeing TMobile TSLA - again (at $500 or lower)
I was going to jump in earlier but now am thinking later. There could be some short term gains, as it seems the Fed wants to do everything under the sun to mitigate further losses, but I am reading so much fear and panic right now that it seems unlikely for a casual trader to have much success. If you are are quick and savvy sure but I meet neither of those trading criteria, so will be waiting for a bit.
There is a part of me that feels almost ashamed for keeping such a focus on finances when the world is burning, per se. But it has been a goal to detach as much as possible from emotional trading and really just focus on sentiment, one of the few market currents that I can swim to. I dunno, figured this was an appropriate place to open up for trader therapy
-------------------- notapillow said: "you are going about this endeavor all wrong. clear your mind of useless fear and concern. buy the ticket, take the ride, and all that.... " ChrisWho said: "It's all about the journey, not the destination."
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LogicaL Chaos
Ascension Energy & Alien UFOs




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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: ManianFH]
#26532029 - 03/13/20 02:46 AM (3 years, 10 months ago) |
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ManianFH
living in perverty



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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: LogicaL Chaos]
#26537651 - 03/15/20 11:25 PM (3 years, 10 months ago) |
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Looking bleak for Monday. I am no expert but it sounds like people are running away from the markets right now. I feel really bad for anyone who was/is trapped in a sinking 401k or was otherwise unable to shift their position to safety.
-------------------- notapillow said: "you are going about this endeavor all wrong. clear your mind of useless fear and concern. buy the ticket, take the ride, and all that.... " ChrisWho said: "It's all about the journey, not the destination."
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sh4d0ws
LSx


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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: ManianFH]
#26537702 - 03/16/20 12:21 AM (3 years, 10 months ago) |
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I don't think Monday is gonna be pretty
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Baby_Hitler
Errorist




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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: ManianFH]
#26537717 - 03/16/20 12:35 AM (3 years, 10 months ago) |
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Even bonds are tanking, now. Vanguard Total Bond market fell nearly 4% last week. Also, Dow futures hit their limit down onSunday.
-------------------- Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ Ƹ̵̡Ӝ̵̨̄Ʒ (•_•) <) )~ ANTIFA / \ \(•_•) ( (> SUPER / \ (•_•) <) )> SOLDIERS / \
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geokills
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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: Baby_Hitler] 1
#26538045 - 03/16/20 07:45 AM (3 years, 10 months ago) |
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Trading this morning happened for about, oh I don't know, a second or two before the 7% limit down breaker was leapfrogged and the SPY is currently froze down 10.5%. 
Seems not improbable that we're going to hit the 13% limit down breaker as well. 20%, hrmm, that seems like a stretch but who knows. Bid/Ask spreads are possibly the widest they've ever been. Options spreads? LOL, fuhgettaboutit.
This is deleveraging derived from a strong risk-off appetite. It's fairly insane how used to leverage and margin (trading with borrowed capital) our financial system has become accustomed to. When it seems like the market is in a never ending march higher, it sure does bring in the big bucks. But in those few and far between moments when everyone tries to rush the exists, the leverage is an absolute killer as margin calls run rampant and capital must be raised from wherever possible, thus bringing down nearly every risk asset across the board.
Keeping my eyes on picking up a few things as the smoke clears, although I'm not sure that will be today.
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-------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
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geokills
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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: geokills]
#26538183 - 03/16/20 09:05 AM (3 years, 10 months ago) |
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We are seeing some sustained (intraday) moves to the upside. Whether that holds in the coming days is anyone's guess, but in my opinion it's worth taking a shot at some exposure here, just keep it small and on a tight leash.
In some UPRO at $27 (a triple leveraged S&P500 fund). Picking up some STOR this morning, better than 5% yielding real estate investment trust and down 20% on the day. Had meant to pick up some NLY as well, but missed it. Also should have picked up some DOCU, stupid strong move. If we see another downdraft, this one will be on my buy list.
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geokills
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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: geokills]
#26538356 - 03/16/20 10:46 AM (3 years, 10 months ago) |
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Out of UPRO for a small profit. Treating STOR as a long term position that I won't be trading around. Would like to add to MSFT and initiate positions in DOCU, NLY, CLX and NFLX on further downside, but I just don't have a lot of confidence in this market and am not willing to chase given the huge swings.
Two stocks I am on the fence about are AMZN and AAPL. While I would like to get some, as shopping from home is obviously not stopping, and the likely introduction of 5G chips on the next round of iPhone's could lead to a supercycle, I'm a little concerned about supply issues for both. With regard to AMZN, I'm also concerned about cost issues relating to their Prime delivery service. I was reading the Amazon Flex Driver's reddit board a couple days ago and some drivers noted having paid blocks with minimal or no packages to deliver when they arrive at the distribution centers. This is because the inventory systems, especially for food delivery, aren't able to adequately track items, so while Amazon is reserving drivers for committed blocks based on orders, when it comes time to pack and ship those orders, there isn't inventory available to fill them as expected. I have experienced this myself with roughly 50% of the items in my Whole Foods Prime Now deliveries being unavailable this past week, even though the cart system showed them as available at the time of order.
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geokills
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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: geokills] 1
#26539595 - 03/16/20 10:23 PM (3 years, 10 months ago) |
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Breadth: Less than 4% of stocks are above their 200 day moving average. VIX is now at 2008 crisis levels. This is huge distribution. Just huge. Normalization should be near on the horizon. Note, normalization does not mean a sustained move higher. I'm not advocating for anyone who isn't used to actively trading to try doing it now... but on the other hand, I have advised my parents (just under 80 years old), to wire whatever cash they have laying idle and un-needed for the next few years, into their brokerage account to start picking through the rubble for longer term equity exposure.
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ManianFH
living in perverty



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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: geokills]
#26539767 - 03/17/20 12:38 AM (3 years, 10 months ago) |
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Quote:
geokills said: Breadth: Less than 4% of stocks are above their 200 day moving average. VIX is now at 2008 crisis levels. This is huge distribution. Just huge. Normalization should be near on the horizon. Note, normalization does not mean a sustained move higher. I'm not advocating for anyone who isn't used to actively trading to try doing it now... but on the other hand, I have advised my parents (just under 80 years old), to wire whatever cash they have laying idle and un-needed for the next few years, into their brokerage account to start picking through the rubble for longer term equity exposure.
This is very interesting. I have been anxious to get back in, and maybe this is nearing the proper time. I might wait through the week to look for any stability but am carefully considering long HODL positions now.
-------------------- notapillow said: "you are going about this endeavor all wrong. clear your mind of useless fear and concern. buy the ticket, take the ride, and all that.... " ChrisWho said: "It's all about the journey, not the destination."
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geokills
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Re: STOCKS - An Intro Tutorial & Ongoing Discussion [Re: ManianFH] 1
#26540241 - 03/17/20 08:22 AM (3 years, 10 months ago) |
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There's definitely no hurry. Unless you're trying to trade the whips (which is most often a fool's errand), it's going to be safer to wait for stabilization and signs of a base being built before committing capital. You might miss the first 10-15% move off the bottom, but if you're building a long term position that shouldn't be a concern. It's also worth noting that in attempting to catch the bottom, you'll probably miss the mark by more than 10-15%. 
Some stocks of note:
- CLX, all time high. Missed it, not chasing.
- NUGT, a leveraged gold ETF, moving very nicely. Missed it, but can still be used as a vehicle for day trading.
- NFLX, pierced through its 200 day moving average but it seeing support at $300. I don't see why NFLX would incur any material issues with its business model due to the virus. More likely, this scenario will increase subscriptions short term. Now about 25% off its highs, I think you could buy it, although I am waiting because it is a very exposed stock subject to the whims of the broader market.
- STOR, real estate investment trust that is likely to face pressure as rents during this period will be diminished, but this company is less leveraged than most REIT's and rather diverse in its tenants. Definitely a stronger company than it was when it IPO'd in late 2014, and is now trading below its IPO price with a 7%+ yield. I am not getting paid off for this one yet, but I am buying it here.
Here's an update the CEO issued this morning:
Quote:
STORE Capital Provides Corporate Update 6:45 am ET March 17, 2020 (BusinessWire) Print STORE Capital Corporation (NYSE: STOR), today announced that Chief Executive Officer Christopher H. Volk has issued the following Letter to Stockholders.
To our Stockholders:
In light of concerns surrounding the COVID-19 pandemic, which has resulted in material capital markets volatility and equity valuation declines, I wanted to provide you with a corporate update.
Contract Quality. STORE provides net lease solutions to nearly 500 middle market and larger companies that are spread across 112 industries. While it's still early and no one can predict the ultimate outcome of this pandemic, as of today we have received just a handful of calls representing well below 0.5% of rents from tenants stating that the COVID-19 pandemic will have a potential impact on their ability to meet their contractual obligations to us. Note that the heading of this paragraph is "Contract Quality" and not "Tenant Health." We have always been careful to draw a distinction between tenant credit quality and investment contract quality. Because we own profit center assets, with 92% of our multi-unit tenant investments bound by master leases, our contracts tend to be senior to other tenant payment obligations. In fact, at an approximate 2:1 rent coverage after overhead, we estimate that our average contract can tolerate an approximate 40% revenue reduction and still meet its rent obligations.
STORE intentionally has a highly diverse investment portfolio. Over 75% of our rents are derived from tenants that represent less than 1% of our rents. Our investments are also spread across 112 industries. Geographically, our investments are spread across 49 states, with most of our assets centered in suburban marketplaces. While it is too early to say for sure, my personal opinion is that such markets, which afford customers better opportunities for plentiful "social distancing," may be less impacted by the COVID-19 virus than more urban markets. With such diversity, it is not possible to say how we anticipate our tenants will weather the current pandemic. However, we have always worked to invest in broad-based fundamental businesses that we think are likely to have long term relevancy. As a self-confessed credit "geek" I have always found that an important source of credit support lies in the need for the industries in which our customers operate.
Oil Prices and Supply Chains: STORE has little exposure to real estate centered in markets reliant upon the price of oil. We intentionally avoided Bakken and Marcellus Formation real estate investments. We also have no exposure to convenience stores. This means that lower oil prices will generally help and not hurt our typical customer.
Approximately 16% of our real estate revenues are derived from industrial assets that are devoted to manufacturing. Some of these industrial tenants, together with some of our retail tenants, have exposure to supply chains that extend to China. Through our customer outreach, we have not seen that our tenants are experiencing supply chain issues.
Liquidity: STORE concluded 2019 with nearly $100 million in cash and an unused $600 million fully committed line of credit. In January, we addressed our equity capital needs for the quarter by issuing approximately $150 million in new shares at a weighted average share price of $36. At the time we did this, we knew that this large of an issuance would exact a small toll on our AFFO mark for the year. However, taken in hindsight, this move now appears to have been very wise.
Our acquisition guidance for the year has been $1.2 billion, net of expected asset sales. While it is too early for us to revise acquisition or AFFO guidance, I can say that we are going to limit our investment activity in the short run. For the first quarter, we currently anticipate net investment activity of $225 - $275 million, most of which has already been funded. Part of our investment funding will be in the form of new construction that is already underway. Historically, new construction has amounted to approximately 10% of our annual new investment activity and our unfunded commitments on construction projects currently underway amount to approximately $100 million.
STORE has intentionally built a balance sheet having well-laddered debt maturities. During 2020, we had a $100 million bank term note maturity, which has been extended to 2021 in accordance with the note's extension provisions. The only other 2020 borrowing maturities we have are associated with approximately $35 million in regular amortization of notes related to our Master Funding conduit and a handful of commercial mortgage loans. In advance of the COVID-19 outbreak, it had been our intention to issue new public unsecured term notes sometime in the spring or early summer. STORE has low corporate leverage that has historically approximated 40% of the cost of the assets we hold. Our unencumbered assets are levered even lower at 25%, which intentionally places STORE in a very good position to withstand corporate stresses. Therefore, the new issuance of notes would have been for the purpose of funding the 40% of acquisition activity that cannot be funded with internally generated cash flows. In light of our election to slow or curtail our 2020 planned investment activity, we have no requirement to access the term borrowing markets this year.
Highly Protected Dividend. STORE has had a well-protected dividend from our earliest days as a public company. Today, our dividend is enviably among the most protected among our peer set and provides STORE with margins of safety that are valuable at volatile and uncertain times like this. Moreover, with a dividend payout ratio approximating 70% of adjusted funds from operations, we anticipate being able to internally fund approximately 20% of our annual equity needs for new investments.
Art Van Furniture. Art Van Furniture, a sixty-year-old company and the largest furniture retailer in Michigan, represents approximately 2.45% of STORE's annual rental revenue. The company was acquired from its founding family in 2017 by private equity firm Thomas H. Lee Partners, which, together with KKR, invested approximately $300 million in the company. On March 8, Art Van Furniture filed for bankruptcy protection as a result of illiquidity brought on by vendor demands for added collateral, together with an associated auditor "going concern" opinion in January. The reasons for Art Van's illiquidity are enumerated within its bankruptcy filing and include numerous corporate missteps, together with increased competition from various brick and mortar and on-line retailers. In our opinion, Art Van's issues reflect its particular circumstances and not those of the furniture retailing industry as a whole. Presently, the company is in the process of liquidating inventory, while various parties have reported an interest in company portions. At this time, it is too early to estimate our eventual investment recovery. That said, STORE has periodically had vacancies that arose from top ten tenants. Nonetheless, our five-year cumulative AFFO per share growth through the end of 2019 approximated 43% while our dividend grew 40%.
Our Stock Price. As I write this letter to you, our share price is being dragged down with the broader markets and now is only slightly in excess of where it stood at our November 2014 initial public offering. Per the earlier paragraph, our AFFO per share back then was actually 43% less, our dividend was 40% less, our dividend was less protected, we had a single BBB- corporate rating (we are now rated BBB from three rating agencies), we had 947 properties (we had 2,504 as of the end of 2019) and we had 50 employees (we now have a team of 97 incredible people). Quantitatively and qualitatively, STORE is a far better company today than when we introduced it to the public in 2014. I would also note that the Ten-Year Treasury note yield over our more than five years as a public company has ranged from roughly 1.5% to just over 3%, while we have produced double digit rates of return for our stockholders each year. Currently, the Ten-Year note is under 0.8%.
Given the pressure on our share price, many of us at STORE have recently purchased shares, which reflects our just confidence in our business model and our customers. Personally, I wish I had waited until today, but we have a trading window for insiders that closed! One thing we have no plan to do is repurchase shares. I have done this once in my life at a prior company and do not plan on doing so again. My reasoning for this is that REITs have comparatively little free cash flow to repurchase shares relative to our C-Corp counterparts as a result of the dividend requirements that help make us what we are. In our case, STORE has about $140 million in annual free cash flow after dividends, which would barely put a dent in our equity market capitalization. That means, to make a material impact, we would either need to undertake more leverage, which we will not do, or liquidate assets to repurchase shares, which is equally problematic. Over the long term, well-run net lease REITs should always trade above their net asset value. Those who know me know that I tend to think of our company as a non-bank financial services company in that our tenants, in electing to lease from us, have made a decision to have a landlord rather than a banker. So, just as well-run banks tend to trade above book, so too should a net lease REIT trade in excess of NAV. This is another reason net lease REITs should avoid share repurchases. In my opinion, a net lease REIT that consistently trades for a value less than the value of its assets implicitly should evaluate why it is a public company.
Business Interruption Insurance. As part of our lease requirements, we require our tenants to maintain business interruption insurance. In general, such insurance pertains to the physical condition of our assets and so is designed to compensate for fires, floods or other natural disasters that result in location closure. However, some tenants may have insurance that can compensate them for closures arising from other causes. We are investigating the extent to which such insurance may assist tenants in closures arising from the COVID-19 pandemic, but do not believe it will be material.
I would like to close this letter with some broader observations. Since February 10, the value of our shares has plunged by over 54% to a price not seen since our November 2014 IPO. Meanwhile, several peer companies that I hold in high regard have seen their shares fall substantially less. A key difference between STORE and most outperforming peer companies is that STORE invests exclusively in profit center real estate leased to middle market and larger companies, whereas most better performing peers tend to emphasize investment-grade tenants. (It should be noted that they also do have material exposure to middle market and larger unrated companies.) The performance disparity therefore appears to reflect a widely held view that larger investment-grade rated companies will weather a material economic disruption better than will their middle market counterparts. I have a few comments regarding this perception:
We are creating a forest. The quality of our portfolio is a function of our contract seniority (this includes master leases, investments relative to underlying replacement cost, tenant credit quality, corporate business model, management team, tenant corporate capital stack, industry and other qualities) and our sector-leading investment diversity. We have always been about the creation of an investment-grade forest comprised of unrated trees. We daily focus on certain trees, but we never lose sight of the forest we are creating. Real estate investors tend to have a built-in tree bias, which can miss the point. In his recent 2019 shareholder letter, Warren Buffett (Berkshire Hathaway is a STORE shareholder) advised his investors to focus on the forest and we agree. Our investment spreads are high and we are value investors. I have written articles on the investor belief that real estate investment alpha cannot be created. In other words, our elevated investment yields and annual lease escalations relative to what we would otherwise realize from an investment-grade tenant strategy pursuit could be expected to yield no incremental returns net of tenant non-performance. I have never agreed with this notion, which runs contrary to much of accepted modern portfolio investment theory. To put some numbers on our portfolio performance characteristics, we would need to have a roughly 900% increase in our average annual rent growth drag (this is basically net lost rents) to achieve the property-level returns we would realize from new investment yields of 6.5%, coupled with annual future lease escalations of 1% annually, which approximates what one might expect from a more investment-grade centric tenant pursuit. And we would have to achieve this elevated rent growth drag ratio every single year. To put this into perspective, portfolios we helped create for a predecessor net lease platform from 2003 to 2008 realized nowhere close to such losses, when looking at average annual performance from 2003 through 2012. We do not anticipate that such would be the case. Moreover, a look at S&P credit migration statistics would suggest that BBB-rated tenants can be expected to migrate to non-rated or below investment-grade status nearly 60% of the time over a ten-year period. In such an event, one would have accepted a materially lower initial investment yield, lower annual lease escalations, a generally higher cost per square foot, a lack of unit-level financial statement reporting, the general absence of master lease documentation and a frequently reduced lease term all in exchange for a transient credit profile. At STORE, we are value investors and are looking to realize outperforming investment returns at a portfolio level over the long duration of our primary lease terms, which tend to average around 17 years. While we have been vigilant in keeping our property vacancies low (we have averaged fewer than ten over the past five years), our goal is not to have the fewest tenant problems. Our goal has always been to realize the highest portfolio rates of investment return. More than that, our goal has been to realize a high compound Market Value Added growth (this is basically the growth of our share value over our underlying share cost). There are few large, investment-grade companies in the markets we address. The investor bias of the perceived safety associated with investment-grade tenants accompanies another preconception: Middle market and larger unrated companies might be subject to material market share losses relative to their larger, investment grade counterparts in times of financial stress. To this preconception, I would note that there are virtually no investment-grade companies that participate in the sectors of our economy represented by our tenants. There are no investment-grade operators of fitness clubs, early childhood education facilities, building supply companies, veterinary clinics or virtually all 112 industries represented by our tenant base. Therefore, presuming a lack of resiliency would be to presume that entire essential sectors of our economy that people rely on every day would be at risk. And even where there are a handful of investment-grade companies, such as within the restaurant industry, there is no evidence of which I am aware that recessions enabled those companies having strong balance sheets to diminish their competition. Again, as I earlier remarked, I have always found that an important source of credit support lies in the need for the industries in which our customers operate.
We designed STORE to be a defensive company. We are backed by rationally priced profit center real estate that is leased on a long-term basis to a wide array of tenants who are aligned with relevant and fundamental industries and with lease contracts that tend to be senior to other corporate obligations. We are also operating in what will likely be a sustained low interest rate environment, in which income-producing real estate assets should have an elevated, not lower value. So, despite the fall in our equity valuation, I am optimistic about both the need for STORE and about our prospects to create value for all of our stakeholders.
In the wake of the COVID-19 pandemic, we were unfortunately compelled to cancel our scheduled April 16 biennial Investor Day at the New York Stock Exchange. Concern for the health of our staff has also caused us to make extensive use of telecommuting and video conferences. We will look to hopefully rescheduling our Investor Day event later in the year and this means that our next formal stockholder communication will occur as we report our first quarter performance, which we currently anticipate will be on April 30. Until then, our thoughts are with the health and well-being of all our many stakeholders.
Christopher H. Volk Chief Executive Officer March 17, 2020
About STORE Capital
STORE Capital Corporation is an internally managed net-lease real estate investment trust, or REIT, that is the leader in the acquisition, investment and management of Single Tenant Operational Real Estate, which is its target market and the inspiration for its name. STORE Capital is one of the largest and fastest growing net-lease REITs and owns a large, well-diversified portfolio that consists of investments in more than 2,500 property locations across the United States, substantially all of which are profit centers. Additional information about STORE Capital can be found on its website at www.storecapital.com.
Forward-Looking Statements
Certain statements contained in this press release that are not historical facts contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to the "safe harbor" created by those sections. Forward-looking statements can be identified by the use of words such as "estimate," "anticipate," "expect," "believe," "intend," "may," "will," "should," "seek," "approximate" or "plan," or the negative of these words and phrases or similar words or phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties, including uncertainties arising from the COVID-19 pandemic and its related impacts on us and our tenants, that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. For more information on risk factors for STORE Capital's business, please refer to the periodic reports the Company files with the Securities and Exchange Commission from time to time. These forward-looking statements herein speak only as of the date of this press release and should not be relied upon as predictions of future events. STORE Capital expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein, to reflect any change in STORE Capital's expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except as required by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20200317005229/en/
SOURCE: STORE Capital Corporation
Financial Profiles, Inc. STORECapital@finprofiles.com
Investors or Media: Moira Conlon, 310-622-8220 Lisa Mueller, 310-622-8231
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