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07/28/2026 Capitalist Times Live Chat
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AvatarRoger Conrad
1:49
Hello everyone and thank you for joining us today for our Capitalist Times live webchat for July. We do appreciate your business and participation today. And as usual, we look forward as to a lively session.
 
There is no audio. Just type in your question and we’ll get to it as soon as we can comprehensively and concisely. We will be sending all of our CT members a link to the complete Q&A tomorrow morning.
 
As always, we’ll start with answers to questions we received via email prior to the chat.
 
 
 
1:50
 
 
Q. Roger, it looks like some of the troubled REIT’s may have bottomed. Both Mid-American Apartment Communities (NYSE: MAA) and Alexandria REIT (NYSE: ARE) come to mind. Your thoughts, and any others that may warrant a look? Also, I see CCJ has a much higher sell limit, so possibly a future addition to the portfolio? Thanks for your continued guidance.—Willy

A. Hi Willy

That's my view. And I have recommended five REITs in the July REIT Sheet I think are good buys on that basis. The sector is proving it can raise capital on terms where investments are accretive to FFO
growth and therefore dividends. They would do better if inflation is quelled and borrowing costs decline. But the best in class anyway have learned to adapt.

Not sure if we're ready to jump on Cameco again at this point. There's still a lot of hype in nuclear power. And outside of government money, there's little if any cash being generated by developers. This is an industry where development occurs in years if not decades.
And right
now a lot of investors are treating the stocks like tech.

Cameco makes money under long-term contracts. But steady earnings--not
moonshots--are what's in store. And while it's off its highs, the
stock is still at 14X projected FY2027 sales that look optimistic.

Q. Reportedly DHT Holdings’ fleet of VLCC tankers were all contracted outside the Persian Gulf when hostilities began so they’ve benefited from moving non-Persian Gulf crude oil while other tankers were stuck inside or outside the Strait of Hormuz. Is this deployment a sustainable advantage or is it just a short term bump until other carriers can re-deploy their tanker fleets? Thanks. David L.
 
A. Hi David
1:52
DHT Holdings (NYSE: DHT), which we don't currently cover, will release Q2 results on August 5. And I would expect to hear a great deal more about where its tankers are physically/geographically and regarding contracts.

Generally speaking, we're wary of making direct bets on anything where the value proposition rests on what happens in the Persian Gulf--or any geopolitical events. The situation there is of course extremely fluid. And an advantage with, for example, Iran in control of the Strait of Hormuz and the Houthis doing the same in the Red Sea could be a disadvantage within days if not hours.

LyondellBasell Industries' uncharacteristically wild volatility this year is a pretty good example of what happens when a stock comes to be perceived as a proxy for geopolitical developments. The stock had been trending lower the previous couple years as the business cycle in its chemicals business bottomed out. But a sudden advantage from having
feedstocks and facilities outside the Persian Gulf roughly doubled
1:53
the share price in a couple months. Then it gave up about three quarters of those gains over the two months following the "ceasefire," bounced when the missiles started firing again and backing off again in
anticipation of Q2 results later this week.

The lesson here is you can make a lot of money owning a stock before geopolitical events send it higher. And quite frankly, I missed it on Lyondell. But you'll give up most of the gains by sticking around too long. And buying after the event after the stock has run is a pretty good way to lose a lot quickly.
1:54
Like I said, we don't currently track DHT in EIA. But I will take a look at it when they release Q2 numbers July 31. Tankers are going to get interesting again, especially as US and Canadian LNG pick up steam.
 
 
Q. Is USA Compression (NYSE: USAC) a buy in a portfolio that holds all the major pipelines lp’s in your recommended portfolio? long term growth prospects? Thanks to both of for your timely advice.—Monroe J.

A. Hi Monroe

USA Compression is on the High Yield Energy List, which is a separate EIA group that focuses on energy companies offering high current income. Its growth is going to basically track natural gas production volumes in the US, as it provides "compression" services that enable gas shipments on longer haul pipeline systems.
1:55
At this point, we're seeing gas demand rising for generating electricity and for LNG exports. Growth is heavily contracted and incremental. So boosts to USAC's business are as well. Later in the cycle, we should see a larger pick up in volumes. But at this point, the primary appeal for a stock like USAC is going to be the current dividend. And with coverage volatile from quarter to quarter, I don't expect increases, though the cushion is consistently growing.

USAC is also listed in the "MLPs and Midstream" coverage universe that's posted with every EIA issue.
 
Q. Good morning Roger - thanks as always for hosting the live chats.
1:56
1. What are your thoughts on the BEP / BEPC share structure simplification? I was surprised (and on balance disappointed) that the unifying structure is now slated to be c-corp shares. What will be the tax implications of all my BEP MLP shares now converting to BEP c-corp? (Rhetorical question - I don't expect you to know that answer so soon) I find it a bit confusing to see that this announcement has, at least in the short term, collapsed the premium previously assigned to the C-corp shares, moreso than raising the value of the MLP shares.
2. You've commented a few times recently on the takeover value of the Boralex deal and what it implies for other renewable operator-developers (esp. CWEN). What about Northland (NPIFF)? Would you speculate at a take-over value for it? The last several years have taught me that any renewables company I own will get an offer while the shares are still in lowball territory, and I'll be grumbling again that I wish management had said no and waited another 3 or 5 years.
3. Any big picture thoughts on the discrepancies in regulator attitudes to different mergers and rate cases? Key example: no one seems too bothered by AWK merging with Essential, but there are some possibly influential complaints about NEE-D merging. Is there unique concern about electricity affordability and regulation, while water is just not particularly controversial? I also see more charged statements from state officials that they see electric rate increases as unpalatable. Is this a general, national trend, or is this reflective of particular places and differences in how infrastructure costs will get charged to various stakeholders?
Thanks!--Dan N.
 
A.  Hi Dan
1:57
Brookfield had basically telegraphed its intention to allow some conversion option from BEP to BEPC earlier this year. So the once massive premium had narrowed greatly before this announcement.

Generally speaking, "simplification" has been positive for investors longer-term, though with some bumps in the near-term. Clearway Energy (NYSE: CWEN), for example, has been under pressure since converting
Class A and Class C shares into one class of stock earlier this year. That's likely because some Class A owners bought in advance to bank the previous discount of A shares to C shares, which they're now doing by selling the unified shares. But Clearway is is still the same solid company with locked in, contracted growth in cash flow and dividends the next 5 years. That should be confirmed with Q2 results and updated guidance August 5. And I consider the lower price a buying opportunity.
1:59
My view is Brookfield shares right now are in the same situation. Management cites increased compatibility with index inclusion as a major benefit for the share price longer term. And it noted institutional interest in BEPC the C-Corp versus BEP as an MLP as a potential additional source of outside capital to fund CAPEX, which in turn will fuel cash flow and dividend growth.

I think that's all likely. The terms of the conversion are that BEP units will be swapped for new C-Corp shares on a one-to-one basis. BEPC shares will also be swapped for the new C-Corp shares, creating
one unified equity. BEP and BEPC owners as of August 21 will vote separately on the transaction at special meetings to be held on October 14. And assuming approval, management expects to close by the end of the year.

As a C-Corp to C-Corp exchange, BEPC shareholders' conversion to the new company is obviously tax exempt. What's different about this deal is the MLP unit to C-Corp conversion is also expected to be tax exempt.
Cost basis will remain the same for investors. But there will
be no capital gains due in either the US or Canada, as has been the
case with other MLP-to-C-Corp conversions in the US.

New BEP will, however, send a 1099 rather than the K-1 as in the past.
And management says it expects a meaningful portion of dividends paid
going forward will be tax advantaged, as they were with the MLP.

I expect more details with Brookfield's Q2 and guidance update on July
31. But the selling we've seen recently looks like an
overreaction--and a buying opportunity to buy this very high quality
contract electricity generation company.

I think Northland Power could get a takeover offer in the next few years, though I would not expect a high premium one before more of the current aggressive CAPEX plans have been successfully executed. There was some good news earlier this month when the offshore wind facility off the Polish coast began generating first power. Look for earnings August 12.
2:01
An offer at the same valuation as Boralex would be around USD30, so twice the current price. But a more likely one would be in the 20-25 area in the near term.

As for your third question, I agree that water in general is not as controversial a rate/affordability issue as electricity. And I would also agree that the risk varies widely by jurisdiction. The state of Maryland, for example, has a long history of contentious regulatory relations--basically blame utility greed first. Residents have paid a heavy price over the years in less reliable service and higher costs, particularly compared to Virginia where generally cooperative relations have produced far more reliable service and in fact much lower electricity rates.

The key to low cost, reliable service at a time when reliable power is critical and demand is rising is always to promote investment. And the states that have been able to provide a good environment to attract capital have fared far better long-term than the states that have
2:03
focused on immediate rate cuts. Consider that the 15 states that "deregulated" electricity in the 1990s all had much higher power cost increases than the 35 which maintained regulated utility monopolies--with the same companies generating and distributing.

Unfortunately, utility bashing is a time honored practice of desperate politicians. And many Americans are facing tough affordability questions now. So we can expect some companies and their investors to suffer.

That could extend to rejecting some M&A. But I think NextEra/Dominion have the distinct advantage of operating in states where utility/regulator/politician relations are good and electricity rates are well below the national average. That's even true for Dominion, despite operating in the data center hub of Virginia. And the next state elections are well off in 2027. Other states include the Carolinas and Florida, which is not required to approve this deal but almost
certainly would do so.
2:04
NextEra has already given us an update on this deal and Dominion will no doubt do so on July 31, when it releases Q2 results and updates guidance. It has a long way to go with regulatory approvals. But so far, I don't see any reason to doubt management's projection of a close in a little over a year.
 
 
Q. I just read that Brookfield Renewable plans to combine BEPC and BEP.  And concomitant with that announcement, J P Morgan downgraded BEP from neutral to underweight.  
 
Could you explain the possible motivation for the combining of BEPC and BEP, and are there any tax consequences for holders of either BEP or BEPC? Also, why the JP Morgan downgrade?
 
BEPC has fallen significantly in price since the announcement.. I do not own BEPC, and recently bought BEP in my individual account based on your recommendation..
2:05
 
I am sure I am not alone in my question is.... Maybe you would want to sen out a "blurb" to all holders of Utility Investor, and let us know what action, if any, you would recommend.
 
Thanks—Jack A.
 
 
A. Hi Jack

Brookfield had basically telegraphed its intention to allow some conversion option from BEP to BEPC earlier this year. So the once massive premium had narrowed greatly before this announcement. This is
a little more than most expected. But I think it's all-in-all a pretty big potential positive.
2:06
Generally speaking, "simplification" measures like this one have been positive for investors longer-term, though with some bumps in the near-term as the market adjusts. In Brookfield Renewable's case, the
company has had a C-Corp listing that's been extremely popular with indexes and institutions. But it's only about one-fifth the size of the MLP listing, which has not been popular.

C-Corp shares and MLP units represent the same ownership and pay the same cash dividend. So the discount has been due to technical factors, such as many institutions' inability to own partnership units and an aversion of many individual investors to K-1s. Management hopes to broaden ownership with this deal, by making a much larger C-Corp share available to indexes and institutions--and so doing  increase access to low cost capital.
2:08
I think those are reasonable expectations. And it appears management has found a way to do this transaction without creating a massive tax liability for either the owners of the C-Corp shares (BEPC) or the
partnership units. You as a BEP owner now will begin receiving a 1099 at tax time instead of a K-1. But management also expects to be able to realize substantial tax advantages under the new structure that will tax advantage at least a portion of the new shares' dividends.

I expect more details with Brookfield's Q2 and guidance update on July 31. But the selling we've seen recently looks like an overreaction--and a buying opportunity to buy this very high quality
contract electricity generation company. And I would expect another quarter of roughly 10% FFO per share growth and progress toward the target of deploying 10GW of non-CO2 energy annually, with a heavy uptick of storage as we saw NextEra announce last week.
2:09
I don't know the reason for the Morgan downgrade. But looking at the example of Clearway Energy--which recently consolidated discounted Class A shares into one class of equity--there may be an expectation of selling by owners of BEP who had previously bought to arbitrage the valuation difference. I suspect that's already happened with BEPC and BEP now already trading at basically the same price. But in any case, it's basically irrelevant to anyone with an investment time horizon of more than a few weeks--and especially those of us who own this stock in part for a growing and generous dividend.
 
 
Q. Hi Roger:
Quick question about the time of any dividend increase for MPLX. 
1.   I have noticed that for the last 5 years, any dividend increase for a subsequent 12 month period for MPLX actually kicks in with the 4th quarter payment starting the 2nd or 3rd week of November each year. 
2.   So when you have reported that MPLX has previously announced 12.5% dividend increases for 2027 and 2028,
2:10
1.   do you have any idea if we should expect that increase to commence in the 1st quarter of 2027? Or the 4th quarter of 2026 (as it has historically been done)???
Any guidance would be appreciated. Thanks—Barry J.
 
 
A. Hi Barry.
 
MPLX hasn't specified the timing of the next dividend increase. But I think we can infer they will follow the timing of previous once a year boosts, which would be for an announcement in late October and an increase in the November payment.
 
Management has guided to another large boost at that time, based on expected cash flow growth from projects entering service and recent acquisitions. I would expect them to affirm it with Q2 results and updated guidance August 4.
2:11
Q. Hello gentlemen. Quick question are you still recommending AGLXY. It did well initially, got up to around $7 but had dropped to below $5.80 at this point. Should I stick with this one or move on? Thanks—Glenn B.
 
A. Hi Glenn

We're staying with AGL Energy in the Conrad's Utility Investor Aggressive Holdings, despite the recent downside that basically wiped out what had been a decent year-to-date profit.

The company tightened up its full year 2026 (end June 30) guidance for EBITDA and underlying net profit less than two months from the end of the year. And the only significant events for the business since have been positives--the beginning of construction on a natural gas-fired power plant in Western Australia, and the close of the sale of a non-core telecom asset--have been positives. I still expect a sizeable dividend increase over a year ago when they release full year results in mid-August.
2:12
Why the decline? Some of what we've seen in AGLXY is from a drop in the AUD to 69 US cents. Some is due to weakness in the Australian stock market overall since the spring. And some appears to be due to concern about backlash to higher energy prices, including for electricity. But this company continues to make solid investments and
I expect a return to a double-digit share price for AGL in the next couple years.

My patience isn't infinite. But this still looks like a high quality company trading at a low price.
 
Q. Hi. I've seen mentioned that "Passive Foreign Investment Companies" (PFIC) are taxed at the highest tax rate. In Canada, does this apply to Freehold Royalty and Prairie Sky Royalty for a U.S. holder? I've held Freehold in an IRA and so far haven't heard anything. It was also said that deferred income from these securities accrued at a high interest rate. Ever run into this?
2:13
Keep up the good work.—Frank F.
 
A. Hi Frank

PFIC taxes are higher than taxes for corporations. But as far as the information I have, neither Freehold or Prairie Sky are subject to that tax. And so long as your brokerage is getting that part right, I think you can comfortably sit tight.

Another option would be to swap for a company like Viper Energy (NSDQ: VNOM), which is a US corporation that essentially pays dividends like
a royalty company--the payout rises with energy prices--but sends a 1099 at tax time. Its sponsor and chief owner is Diamondback Energy (NSDQ: FANG). And it's a High Yield Energy List member in EIA.
Tommy L.
2:18
Recently the Saudi refinery operations were damaged as part of the Iran-US war. What investment opportunities do you see due to this action? Thanks for these monthly chats.
AvatarElliott Gue
2:18
Right now, it's not going to have a huge impact because most of Saudi's refining capacity is basically locked off the market anyway because of the closure of Hormuz as we explained in the last issue. The exception is 750,000 to 1 million bbl/day out of Yanbu. Once the Strait fully reopens, it will depend on how quickly they're able to get capacity back online. I think the big winners ultimately will be the services companies as they'll ultimately be getting the contracts to perform this sort of repair work -- SLB/BKR being our two favorites.
Fred L.
2:22
Hi Elliott,

For today’s chat: What are your thoughts on the merger proposal for IHS? The per share compensation is below your recommended buy under price. It looks like an easy NO vote. I’m guessing there may be a lot of momentum toward approval, though. 
Thank you
AvatarElliott Gue
2:22
I suspect the deal is likely to go through at this point. $8.50 per share in cash, pretty much in line with our entry. Most likely we'll just recommend exiting the trade for a loss of a little under 5%.
Jeffrey H
2:26
Dear folks, You have VIper listed as yielding 8.5%, yet other sources (such as Schwab) put the annual distribution at about 5%.. Can you explain the variance? Also, for those of us who truly dislike K1s, do you see Viper as a good alternative to DMLP and BSM?
Also, I am curious why you have avoided KRP, which appears to have outperformed all of the other three year-to-date and does not issue a K1. Many thanks
AvatarRoger Conrad
2:26
Hi Jeffrey. Viper Energy pays a dividend in two parts--a "base" portion of 38 cents per share per quarter and a "variable" portion that depends on free cash flow for a given period. Big financial data services will typically calculate the percentage yield they report off the base portion alone, or sometimes just the most recent payment. Our number includes the variable portion as well.

Oil-focused Viper is a somewhat different animal than either Black Stone Minerals--which is natural gas weighted--or Dorchester Minerals, which is a true variable dividend company. And it's also considerably more tied to a single producer's plans, Diamondback Energy. But it is a company paying a dividend that should rise with commodity prices over the longer term.

We don't currently track Kimbell Royalty Partners. The dividend though appears to be variable along the lines of Dorchester Minerals, so I would expect some volatility in your quarterly payments.
Thomas S.
2:30
AROW has completed a major acquisition, and the price of the stock has risen. What is the future of this bank?
AvatarRoger Conrad
2:30
Hi Thomas. I think Arrow Financial's future is very bullish, though I would hesitate to chase the stock above my buy-in price of 40. Shares are already ahead by about 30% year to date.

Q2 results were very strong, continuing the trend of recent quarters. And the addition of Adirondack is expected to be 15-20% accretive to earnings per share going forward.

My view is this company is likely to see a high premium takeover offer sooner rather than later. But it looks capable of solid earnings and dividend growth on its own. And very high credit quality standards are good protection from a weaker US economy in the near term.
JT
2:31
HI Elliott, AI/Semi are pulling back pretty good, finally.  Do you still see this as a pullback and buying opportunity in an ongoing bull market or are there signs that this could be the top for the AI/Semi space?  Any thoughts on FLEX, ANET, NTAP, ORCL during this pullback?
AvatarElliott Gue
2:31
I still think there's more upside for the group longer term. I'd compare the current situation to the late 1990s -- we saw 20% to 35% pullbacks in all the leaders like CSCO and QCOM from time to time catalyzed by either macro concerns (Asian contagion/Russia default back then) or minor growth hangovers (short term soft spots in growth). However, these all proved buying opportunities as the stocks went on to make significant higher highs. The agentic AI development is actually fairly new (Basically a November 25 to Feb 26 development), so I think that growth is still ahead. Right now, the market is concerned about the hyperscalers -- ORCL, AMZN, GOOGL, etc. -- due to the immense investment required and the lag in return on that investment. I tend to think they'll be OK longer term and the monetization is coming. However, this hangover could persists a while longer. So, right now I prefer the companies that benefit from all that hyperscaler spending including NTAP and ANET. Note that we still have small
AvatarElliott Gue
2:31
positions in the model portfolio in both ORCL and FLEX (both up since recommendation) but recommended booking most of our gains in both names over the past 6 to 12 months on the way up. Our recommended positions in ANET and NTAP are larger, so this reflects that bias.
James T
2:35
LNG is so low, is this a buy for BOIL
AvatarElliott Gue
2:35
LNG prices are actually pretty elevated right now -- Japan Korea Marker for example is trading north of $21/MMBtu compared to US Henry Hub sub-$3. The problem is that US LNG export capacity is maxxed out, so there's no way to arbitrage that gap. LNG export capacity will grow by ~4 bcf/day by the end of next year (2027), industrial demand also growing and, of course, more demand for electricity due, in part, to the AI buildout.  Rather than buying gas directly via BOIL, which suffers from a built-in degradation as futures are rolled, we like buying high-quality producers like EXE/EQT or LNG exporter VG.
Mark
2:38
Hi Elliott     I have been enjoying Smart Bonds.  I follow your mainly-ETF recommendations but do have some of my fixed income allocation in a 401(k) brokerage account that limits me to mutual funds.  I hear a lot about Kevin Warsh's desire to reduce the Fed's balance sheet and wonder if I should now avoid funds with mortgage-backed securities?
AvatarElliott Gue
2:38
Thanks, glad you're enjoying it. I think Kevin Warsh will take his time in reducing the size of the Fed's balance sheet. However, right now, we're already seeing the Fed reduce its MBS exposure and pivot to T-Bills. So, when Warsh does get around to addressing the balance sheet, I don't think that it will have a disproportionate impact on MBS compared to other government bonds.
Frank
2:43
The Straits have been closed, or at least restricted for a really long time. I understand demand destruction, and China's large reserves, but come on! Prices are much lower than I would expect. Every time they rise the President jawbones and talks the market down. I get that, but  at some point the physical market has to be reflected in the paper market. Crude today is down almost $4 on nothing more than hope and wishes. Geez. Very frustrating
AvatarElliott Gue
2:43
The tight physical market is reflected in refined products where crack spreads recently soared to record highs. We wrote about this at some length in last week's issue and, over the weekend, I added a bit more detail in a video I published here: https://open.substack.com/pub/freemarketspeculator/p/why-crude-oil-pri... The bottom line is that with gasoline and diesel where they are today, oil "should" be trading in the $115 to $130/bbl range (WTI). It's not because of the China import strike, Saudi/UAE "workarounds" for Hormuz and US/OECD SPR releases -- these have disproportionally loosened the supply demand balance for oil relative to that for refined products. However, all are finite -- ultimately, I believe oil prices will either rise to reflect the physical tightness or refined products prices will spike enough to destroy demand. (or perhaps so combo of the two).
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