The Worst Days of Leonaye Bulger

By Michael Hooper

I was rummaging through old photographs the other day when I found one of Leonaye Bulger, a friend from Clarinda, Iowa, my hometown where I grew up. She and I belong to the same church, Trinity Presbyterian Church where her father was the pastor.

Leonaye died tragically of cancer at age 28, too young. She was a good person. She was funny and kind and she liked photography and printing, she worked in the printing industry in Omaha and had saved her money to buy a new car. She was a hard-working person with a sweet and warm personality.

Sometime in the late 1980s, Leonaye and I arranged to meet for a day of photography around Clarinda, we were both home for the holidays. I remember it was cold that day yet it was sunny with blue skies. We drove in my car and walked all over Clarinda taking pictures. I remember we walked around the Gun Town area of Clarinda and took some pictures of goats in someone's field. I took a picture of her standing on a sidewalk on the north side of the square in downtown Clarinda. There she is smiling with her camera around her neck, wearing a blue coat with gloves because it was a cold day in Iowa. You can just see her excitement at being alive. She is so pleasant and easy to be around; a delightful personality with a beautiful soul. We were not romantic but I did kiss her and hug her and we held each other for a moment, I could sense she was holding out for someone special.

At church, my parents and brothers and I would eat cookies and drink coffee in the after church social room. I often talked to Kathy Hunter and sometimes Leonaye Bulger. 

After finding this old photo of Leonaye, I decided to look her up on the Internet. I found that she was the co-author of a book called The Worst Days, the Journal of a Young Cancer Patient for Healthcare Professionals, by Leonaye Bulger and Judy Dierkhising. There was one left at Amazon and I purchased it. The book is only 32 pages and I quickly read it after it arrived.

There are many worst days in the final eight months of her life. The first is the realization of her illness. She has a vaginal discharge but is confident it's not a yeast infection. She insists her doctor check her again and they do a biopsy.  For the results, she goes to the medical office and her doctor tells her cancer had spread to the upper third of her vagina. She writes, "I have endocervical andenocarcinoma cancer. I am devastated! Once the appointment is over, I lose it, the tears roll nonstop. How could this be? I am only 27 years old I do not drink, smoke, do drugs or sleep around! Why me? I learned today the body is mortal."

The book documents some of the drama that she is experiencing with relationships, including her boyfriend Michael. She buys a rabbit for companionship, and enjoys talking late into the night with her sister.

It's interesting her boyfriend's name is Michael, same as mine, but of course it's not me. I married my wife in 1993. Leonaye Bulger was born May 10th, 1966, and died May 29th, 1994. She left behind her sister and parents.

Among her worst days was the doctors' inspections of her pelvic region, it was embarrassing lying on a table where doctors, nurses and image specialists inspected her.

In her final days, the cancer destroys tissue in her uterus and this causes infection and swelling and she balloons to looking like seven months pregnant. She experiences very severe pain. I feel so sad for her, she was given morphine and was throwing up and unable to write in the end so she dictated her last words to her mother.

'Mom do something, the pain is too much," she said. The nurse prepares to inject more sleeping medicine. But Leonaye dies. She had just turned 28 years old.

In comparison to her worst days, Leonaye and I shared one of her best days, when she was happy, she was excited about shooting photos of buildings, animals and nature with me. We had great conversations. I think we were together maybe three or four hours. I remember leaving the Bulger house that day feeling a sense of contentment and hope. The Rev. Charles Bulger is a kind and warm soul. He always is so encouraging, and supported my family and my career in newspapers. These people are the kind of people who make a community stronger and better, more loving and full of hope. I'm sorry Leonaye did not live any longer. The world could have used her bright and shining spirit. May God give her the highest joys in heaven for all The Worst Days on Earth.

Evergy Hires Texan as New CEO

Evergy  (NYSE: EVRG) has hired a new president and CEO.

The company said today its board of directors has unanimously appointed David A. Campbell as President and Chief Executive Officer and a Director of Evergy, effective Jan. 4, 2021.

Campbell succeeds Terry Bassham, who previously announced his intention to retire from the Company. Bassham will remain Evergy’s President, CEO and member of the board until Campbell joins the Company.

“David is a proven leader with a track record of operational and financial success. His deep understanding of our industry and his ability to work with and balance the interests of all stakeholders, makes him our first and best choice to lead Evergy at this pivotal time,” said Mark Ruelle, Evergy Board Chair and Chair of the Search Committee. “David’s appointment is the culmination of a comprehensive national search that included many highly qualified internal and external candidates. The Search Committee focused on identifying a proven leader with deep industry experience, who has a strong reputation for having led value-building transformations and one who understands Evergy and its importance to the communities we serve. In David, we have found that leader.”

Campbell, 52, has served as Executive Vice President and Chief Financial Officer of Vistra Corporation, a multi-state electricity generation and retail electric provider headquartered in Dallas, Texas. Campbell’s focus at Vistra has included the company’s portfolio transformation, the announcement of the company’s greenhouse gas reduction targets, and the articulation of the company’s capital allocation strategy and long-term fundamental outlook. During his tenure, the Vistra team delivered at the high-end of its 2019 guidance and recently raised its 2020 outlook to the top end of the prior guidance range.

In addition to his strong performance at Vistra, Campbell has been successful in multiple leadership roles. As CEO of Sharyland, Campbell successfully navigated complex regulatory dynamics and won support for an asset swap with Oncor that resulted in a rate reduction for Sharyland’s customers, who otherwise faced higher rates due to Sharyland’s rural service territory. Prior to that, as CEO of Luminant, the largest power generator in Texas, Campbell oversaw coal and nuclear operations that consistently achieved top decile performance in capacity factors and top quartile or top decile performance in costs relative to industry benchmarks. As CFO of TXU Corp., Campbell was part of the senior leadership team that led the company’s financial and operational turnaround from 2004-2007, achieving the top performance in the S&P 500 Utilities Index.

“Evergy has a talented and capable leadership team, a steadfast commitment to serving customers and communities, and a strong track record as an emissions-free energy supplier,” said Campbell. “Evergy’s Board and management team have carefully developed and embarked on a high-performance strategic plan that contains the right elements to accelerate growth and provide tangible benefits for all the Company’s stakeholders. I join Evergy with a shared drive and commitment to provide customers with clean, affordable, reliable and secure energy to power their lives, while driving sustainable, superior value for shareholders. I look forward to working alongside the team to ensure that together we realize the potential Evergy has for continued success and growth.”

In August 2020, Evergy announced it was not going to seek a merger, but instead would pursue its Sustainability Transformation Plan (STP), a five-year strategic plan to deliver increased value for Evergy shareholders and benefit Evergy customers through additional cost reductions, improved grid reliability and security, enhanced customer experience and further accelerate Evergy’s transition to clean energy. The STP is expected to move Evergy to a top-quartile electric utility with 6% to 8% growth in earnings per share through 2024, and without dilution from having to issue additional equity, the company said.

Ruelle concluded, “Terry’s leadership and the culture he built have put the company on a strong, sustainable track for continued success. Terry has had a long and distinguished career as a utility executive, board member and colleague. We are grateful for his commitment to ensure a seamless transition and wish him well in his well-deserved retirement.”

Evergy also today reaffirmed its previously announced 2020 earnings guidance. As disclosed in its third quarter 2020 earnings results, Evergy narrowed 2020 GAAP EPS guidance to the upper end of the range of $2.58 to $2.73 and adjusted EPS guidance of $2.95 to $3.10.

Evergy, Inc. (NYSE: EVRG) serves approximately 1.6 million customers in Kansas and Missouri. Evergy was formed in 2018 when KCP&L and Westar Energy merged. 

Disclosure: The editor of this blog owns shares of Evergy.

CapFed Stock Climbs 13% after joining index but still down 21% YTD

By Michael Hooper

Capitol Federal Financial (CFFN) stock jumped 13% on Friday after it was announced the company would join the S&P SmallCap 600. The stock had hit a recent low of $8.75, but closed Friday at $10.60 per share.

Topeka-based Capitol Federal Financial (CFFN) is down 21% year-to-date compared with a 4% positive return of the S&P 500 through Oct. 2, 2020. The general stock market fell 30% in March during the Covid-19 crisis, but recovered over the spring and summer.

Evergy (EVRG) -- which is a combination of Westar Energy and Great Plains Energy -- is down 19% year-to-date.

Both Evergy and Capitol Federal are conservative retirement stocks that pay nice dividends but are not growth stocks. Mega cap growth stocks like Apple and and Google are winning in the market this year. Any stock that benefits from the home consumer is doing well. Amazon, Facebook, Zoom are all up gigantic. Banks, oil and utility stocks all have performed poorly this year. They are out of favor.

Evergy stock fell from $65 per share to $50 per share after the company announced in early August it was not going to seek a merger or sale as recommended by hedge fund Elliott Management. Investors, thinking there is not going to be a potential upside in a merger or acquisition, dumped the stock. Evergy earnings have been a little weak in the last three quarters yet Evergy is earning respectable money and able to pay its dividend, currently yielding 3.82%. Evergy management sees opportunities to reduce operating costs through its strategic plan by finding synergies between the Missouri and Kansas utilities and eliminating waste. Evergy is stepping up its capital improvement plan, to generate more returns in the future. EVRG stock closed Friday at $51.97

Capitol Federal Financial has fallen from $14 per share in January to $8.75 per share in mid-September. Then recovered 13% in one day after being appointed to replace Neogen (NEOG) in the S&P SmallCap 600 upon Neogen's move into the S&P MidCap 400.

Banks tend to perform better with higher interest rates, this gives them more flexibility in their net interest margin, but interest rates have fallen dramatically this year. The 10-year Treasury only yields 0.69%. People will see almost no returns on their savings accounts. Earnings at CapFed have been OK, but it's possible it may see some benefit in the third quarter from the uptick in demand for housing in Kansas. A few years ago, the company purchased Capital City Bank; this has added new services to the CapFed menu, including commercial loans and trust services. These areas of business will see growth as the bank scales out its commercial and trust services to all of its locations.

On August 6th, Michel' Phillip Cole, a member of the board of directors of Capitol Federal Financial, filed Form 4 with the Securities and Exchange commission saying she had purchased 7,040 shares on August 6th at 9.9459 per share. She listed the purchase as an open market or private purchase of stock. The form says she owns 19,411 shares of Capitol Federal. 

Perhaps the CapFed board member's recent purchase of stock may indicate she thinks there is value in the company and shares are under priced. The bank pays board members $66,000 a year for serving on the board.

CapFed stock is trading near book value. Before Covid-19, CFFN stock traded at 1.4 times book value in the previous three years compared to the current 1.12 ratio.

Disclosure: The author owns shares of Evergy (EVRG), but owns no shares of Capitol Federal.

Hot Real Estate Market In Topeka

This house at 907 SW Anderson Terrace, Topeka, sold in two days, $10,000 over asking price. 

By Michael Hooper

Houses are selling fast in Topeka as the community struggles with an historic low number of houses for sale.

Homes in Shawnee County that sold in July were typically on the market for three days and sold for 100 percent of their list prices, according to the Sunflower Association of Realtors.

Total home sales in Shawnee County rose by 3 percent in July to 273 units, compared to 265 units in July 2019. Total sales volume was $47.2 million in Shawnee County in July, up 17.9 percent from a year earlier. The median sale price in July was $151,000, up from $143,500 a year earlier. 

"The market is hot hot hot," said Helen Crow, agent with Kirk & Cobb.

The total number of active listings in Shawnee County at the end of July was 186 units, down from 344 at the same point in 2019. This represents less than one month's supply of homes available for sale, according to page 255 on Sunflower Association's July report.

"We have the lowest inventory of homes for sale since the troops came home from World War II," said Crow. "There was a housing crunch back then. In 1973, housing was tight but not like this, this is just crazy. We used to have 700 to 900 houses for sale."

A constrained housing supply will lead to more increases in value of the property, she said. 

A good example of what is happening in the market is 907 S.W. Anderson Terrace, my neighbor's house. The three bedroom house went on the market for $110,000 on Friday, Aug. 14. By Monday, Aug. 17, the house had been sold. Multiple offers came in for the property. Crow said she advised her client to bid $10,000 over the asking price and his bid was accepted.

The median list price of homes on the market at the end of July was $153,425. During July, a total of 269 contracts were written up from 237 in July 2019. At the end of the month, there were 320 contracts pending, compared to 311 at the end of July 2019.

The city of Topeka found 1,008 vacant homes without water service in January 2020, Crow said. There are others with water on but still vacant, so there could be more housing stock available, she said. Many of those homes are in terrible shape. Some are OK, but the owner is not motivated to sell for some reason. Crow herself said she is holding onto a childhood home that she should be selling. "I probably need to see a psychiatrist," she said.

Crow said nationwide inventory levels have been falling. There used to be 2 million existing homes for sale in 2019. In June 2020, that number fell to 1.57 million, according to ycharts.

Millennials want to buy a home but Baby Boomers are living longer and staying in their homes, she said.

Another possible reason inventory is so low is some people had considered selling their home in 2020 but when the Covid-19 crisis hit in March, they delayed their plans and stayed put.

Jeff Huckabay, real estate agent with Reece & Nichols, said 2020 started slow, but picked up in the spring, even though the Covid-19 crisis hit.

"This year has been different with Covid-19 but basically it's been a frenzy," he said. "There is not enough inventory. Sellers are getting top dollar. It's a sellers market."

Sometimes, he said, he schedules a buyer to see a home, but by the time they get there, it's almost sold. For example, a couple wanted to buy a home after seeing it in the morning, but the agent for the house said offers were being presented to the seller at 11:30 a.m. that same day. He and his client had 30 minutes to present an offer. Their offer was $6,000 over asking price and they dropped the inspections in order to make the deal happen.

A buyer who is offering below the asking price will likely not get the deal, he said.

Sunflower Association of Realtors represents Brown, Greenwood, Jackson, Jefferson, Lyon, Nemaha, Osage and Shawnee counties.

Total home sales in the Sunflower multiple listing service rose by 10.1% last month to 445 units, compared to 404 units in July 2019. Total sales volume was $75.4 million, up 17.4% from a year earlier. The median sale price in July was $146,000, up from $145,000 a year earlier. Homes that sold in July were typically on the market for 5 days and sold for 100.0% of their list prices. 

The total number of active listings in the Sunflower multiple listing service at the end of July was 451 units, down from 786 at the same point in 2019. This represents a 1.4 months' supply of homes available for sale. The median list price of homes on the market at the end of July was $168,000.

During July, a total of 398 contracts were written up from 370 in July 2019. At the end of the month, there were 509 contracts pending, compared to 476 at the end of July 2019.

Buffett Was Wrong To Sell Airlines

By Michael Hooper

I think Warren Buffett was wrong when he sold his airline stocks during the Coronavirus pandemic. I recently purchased shares of stock in United Airlines (UAL), Southwest Airlines (LUV), JetBlue Airways (JBLU) and Spirit Airlines (SAVE).

Warren Buffett has favored owning hard asset companies like railroads, utilities, manufacturers, banks and insurance companies. He has avoided tech companies because he was afraid new technology would replace the old, leaving some companies behind to die. He is usually the most consummate long-term investor, he typically holds onto stocks for life. Yet he has sold companies. He bought IBM, held it for several years and sold it with no gain. He missed out on a much better tech play with Microsoft that was right there in front of him with Bill Gates on his board of directors for so many years, Buffett had an inside view on Microsoft, now worth $1.4 trillion in market cap compared to $108 billion market cap for IBM. The fact that Buffett chose IBM over Microsoft shows his old man ways stuck in the past. IBM was a name he was familiar with for half a century. Microsoft was a newcomer to the world of tech compared to IBM yet Microsoft made itself into a much larger and more profitable organization than IBM. He’s not all bad at tech, considering Berkshire Hathaway (BRK.B) has a huge position in Apple.

Warren Buffett has owned the airlines before. Buffett invested in US Air in the 1990s, but a price war scared him out of the business. The low-cost carriers expanded their seats, forcing the old-time airlines to lower their fares or face extinction. Buffett didn't think the business was sustainable so he sold his position in US Air. Since then, the airlines have found ways to improve their margins and stay airborne.

Prior to Covid-19, consumers had it good with airline travel, you could fly anywhere in the world at a reasonable price. And the airlines made enough money to stay alive and even pay dividends. Then the Covid-19 crisis hit and airline travel virtually stopped overnight. I think Buffett panicked when he sold the airlines in March-April 2020. He had never seen a stock market crash related to a pandemic before. He had never seen airlines' income vanish overnight. This halt in travel was unnerving. Airlines got a bailout from the government. Buffett doesn't want his companies dependent on the government for bailouts.

With millions of people being laid off during the pandemic, the outlook for stocks looked bleak when Buffett sold his airline stock. Yet U.S. stocks did not stay down long, firing a comeback in April and May. Investors believe somehow the world will find a way to deal with Coronavirus. We believe a vaccine will be found. This faith will carry us forward but we don not know the future and there is no guarantee scientists will create a vaccine that works. There are some promising drugs, but anything can happen. A resurgence in Coronavirus cases is already occurring in places like Florida and Texas where they have opened up their economies.

My portfolio is 74% equities, 22% bonds and 3% cash. So I'm pretty much fully invested. During the downturn I sold some ETFs in the S&P 500 and bought stocks like Apple, Google, Union Pacific, Church & Dwight, Norfolk Southern, Hershey, Casey's General Stores and Visa. As of this writing my portfolio is down 11% year to date, largely because of an overweight position in Berkshire Hathaway. My portfolio was up 18% in 2019.

I bought Southwest Airlines at $26.62 per share on May 11 and then sold my position on June 5 at $37.96 per share for a 42.6% short term gain. I bought United Airlines at $24.52 per share on May 11th and then sold at $42.04 per share on June 5, a 71.45% return. On June 15th I bought back into Southwest Airlines at $36.45 per share and United Airlines at $39.13 per share. I bought JetBlue Airways at $14.25 per share and Spirit Airlines at $24.16 per share.

Airlines will survive. People will eventually travel again. We are a mobile nation. On The Road by Jack Kerouac is a way of life for many people. The adventurous spirit is part of the American Dream.

I am not giving up on Warren Buffett even though I think his best years are behind him. In fact I bought a few more shares of Berkshire Hathaway in the downturn. His company owns about 100 great businesses like Geico, BNSF Railway and See's Candy. It's full of cash, and really undervalued below $200 per share. I have Berkshire Hathaway stock that I have held for over 20 years.  Buffett has been my mentor. I followed him into the railroads in 2009 and 2010. I hope that Buffett will give more cash to his top lieutenants to invest like Todd Combs and Ted Weschler. These two guys are younger, agile and more attuned to the times than Buffett.

The police killing of George Floyd in Minneapolis exposed a deep vein of racism in America, this touched so many lives, people have protested against racism here and around the world. I could not believe the stock market was climbing while there was mayhem in the streets. I hope something good comes of his death, that perhaps we can train police in ways to de-escalate violence rather than increase violence after they come upon a scene.

Presidential election years often are good years in the stock market. I still think the US stock market in the United States is the best place to be invested. I hope doctors find a cure to the Coronavirus soon. Meanwhile stay safe everyone, stop racism now and happy investing.

Editor's Note: The author owns stock in Berkshire Hathaway as well as the airline stocks mentioned in this article.

Evergy Taking Proposals For Sale of Company

Evergy plans to take proposals from potential buyers next month after pressure from activist investor Elliott Management to improve its operations or sell itself, according to a Bloomberg report.

Evergy plans to run a two-pronged strategic review as part of a settlement reached with Elliott in March, Bloomberg said. The review is focused on finding ways to improve the company’s operations on a standalone basis as well as looking at potential strategic alternatives.

As part of that process, Evergy plans to launch a full sales process in June, Bloomberg said citing confidential sources. The company and its advisers plan to reach out to several potential buyers to gauge their interest, including NextEra Energy Inc., WEC Energy Group Inc., CMS Energy Corp., Ameren Corp. and American Electric Power Co., Bloomberg reported.

The process is in its early stages and there is no guarantee any of the parties would pursue a deal or that the process will result in a sale of the company, Bloomberg wrote.

The company’s goal is to have proposals in place before the July 30 deadline set for the results of the review to be reported to the board, the people said. Evergy has said it plans to update the market in August on how it will proceed.

Bloomberg said representatives for NextEra, WEC, CMS Energy, Ameren and AEP said they don’t comment on market rumors or speculation.

I contacted Gina Penzig of Evergy about a potential sale of the company and she said "We don’t comment on speculation in the marketplace." 

In early April, Reorg M&A reported that NextEra Energy (NEE) is working with advisers to consider an offer for Evergy.

NextEra Energy, based in Houston, operates several wind farms in Kansas. Evergy purchases power from multiple wind farms that are owned by NextEra, said Gina Penzig, spokeswoman for Evergy in early April.

Evergy is already changing its strategy because of pressure from Elliott Management. Evergy has increased its five-year capital investment plan to $7.6 billion through 2024 compared to $6.1 billion in its prior plan. Evergy plans to spend $1.5 billion per year for five years in projects that modernize the electric grid, improve reliability while reducing operations and maintenance expense.

With the increased capital investment, Evergy has elected to halt the remainder of its share repurchase program.

Evergy was formed in 2018 with the combination of KCP&L and Westar Energy. The company has 1.6 million customers in Kansas and Missouri.

In 2019, Evergy earned $670 million or $2.79 per share compared with $536 million or $2.50 per share for 2018.

Evergy has been cutting staff through attrition and not replacing them when they retire or leave in order to reduce operating expenses.

One of the first things that Elliott wanted after acquiring shares of Evergy was to put the company up for sale, according to comments made by Evergy leadership. The problem with this is Evergy just went through a merger between KCP&L and Westar Energy. That merger took years of work and hundreds of hours of testimony and documents before the Kansas Corporation Commission. Initially, the KCC rejected the sale because the deal required too much debt. The two companies changed the deal to a stock for stock merger. Then the KCC approved the deal.

Sometimes a utility merger is not always a good idea. St. Joseph Light & Power merged in 2000-01 with Aquila of Kansas City, Mo., and the shareholders with St. Joseph Light & Power did not do so well after the merger because shares in Aquila fell after the merger. St. Joseph Light & Power shareholders who sold ahead of the merger did OK, but the shareholders who took the new stock did not.

Thoughtful Investor Editor Michael Hooper owns shares in Evergy.

Bicycle Sales Are Booming During Coronavirus Lockdown

My Surly Ogre

By Michael Hooper

We've all heard of the toilet paper shortage. Now bicycles are the new toilet paper.

People are looking for ways to exercise and stay healthy during the coronavirus lockdown. Bicycles are the attraction.

"We've had world record sales days," said Gary Long, owner of Cycle Works in Lawrence, Kan. "Unfortunately supplies are running out. It's tough to keep up with demand."

Gyms have been closed during the coronavirus shutdown.

People want something to do during the pandemic, and cycling is a fairly safe form of exercise, Long said in a phone interview.

Brian Buell, owner of Bonzai Cycle Werx, North Richland, Texas, said he has been selling bicycles at a record pace. For example, last weekend he sold 30 bicycles. "We did a whole month's worth of business in two and a half days. Bicycles are officially the new toilet paper," Buell said.

Buell said all of his vendors are running out. "We still have some bicycles coming our way but it's going to get harder and harder to find bicycles under $500 to $600," he said.

Long said the big box stores that sell the cheap bikes are running out.

I think this is wonderful news. Cyclists have known for years that the bicycle is one of the greatest inventions of all time. With just a little effort you can pedal across miles and miles of pavement or trail and leave no carbon footprint. The bicycle gives the cyclist an opportunity to see the world while still getting some exercise. During the coronavirus lockdown I have avoided the car and done most of my shopping and exercise with my bicycle.

The bicycle sales trend is a worldwide phenomenon. There are reports of bicycle shortages in Australia.

Some customers are buying motorized assisted bicycles. These have become very popular with the older set. I have a neighbor who is retired and he loves his motorized bicycle. It's an electric motorized bike that cost him about $600. He rides all over Topeka with his electric bike.

If you want to get some exercise, use no gasoline or fuel, ride a pure-play bicycle. My wife and I have been riding bicycles nearly every day this spring. Gage Park has a bike/pedestrian path all the way around the park. Lake Shawnee also has a wonderful bike/pedestrian path. The Shunga Trail has been extended in recent years, it hooks up to the Landon Trail in south Topeka. So there are plenty of places to ride.

Sometimes I like to ride in the country. Gravel riding is a blast on my Surly Ogre.