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10/29/25 Capitalist Times Live Chat
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AvatarRoger Conrad
1:49
Hello everyone and welcome to our Capitalist Times live webchat for October--and Happy Halloween!
1:51
As always, there is no audio. Just type in your questions and we'll get to them as soon as we can comprehensively and concisely. We will be sending you a link to a transcript of the complete Q&A tomorrow morning--and it will be posted at the Conrad's Utility Investor and Energy and Income Advisor websites as well.
As usual we'll start with answers to questions we received prior to the chat.
Q. Roger, in light of today’s news regarding Cameco, is the stock worth holding here?
I know you cut it loose, but I deferred selling all my position for tax reasons, so still have some left. Tempted to write puts here with ’26 maturity. Also, any benefit here for BEP? Thanks, Willy

A. Hi Willy

This nuclear power development alliance directly benefits Brookfield Renewable, which is the electricity investment arm of Brookfield Asset Management and now also a company strong enough to stand independently. Brookfield owns 51% of
Westinghouse and is part of the alliance to build nuclear reactors in
the US--which has a huge (and very much increasable) US tax dollar
commitment as was reported in the press release.
1:52
That the US government would favor Westinghouse makes sense--it's far
and away the leading US developer of nuclear power and the logical
choice for an industrial policy for electricity favoring nuclear. I
will say that the economic benefit will come only slowly, as these
projects will take years to develop even with fast track regulation.
But this does make BEP/BEPC a certain winner in nuclear and--unlike
most of the nuclear stocks investors have bid to the sky this
year--it's still reasonably priced.
 
Q. What are your latest thoughts on AES and XIFR?
AES-things going well? Going to be taken over? Buy more?
XIFR- FPL still providing strong support? On track to solve their problems and resume dividends? Cheap investment with great upside? How long will we have to wait?--Mr G
 

A. Hi Mr G
NextEra Energy released its Q3 numbers and updated guidance this week. The results were positive, affirming growth as well as long-term guidance for the utility. And the company also announced a new contract with Google that
will allow them to profitability reopen the Duane Arnold nuclear plant in Iowa.
 
They own 51% and essentially run XPLR (XIFR).
And based what I saw, XPLR will report steady progress on its recovery plan when it releases numbers on Nov 4.
There has been one major development for XPLR since last
earnings--which is the deal to sell its ownership stake in the Meade
Pipeline. That's another step to eliminating the convertible preferred
financing and I expect to hear further details on the recovery
plan--including the wind facility repowering. No change in the
advice--still holding and expecting a gradual recovery in the share
price.

AES is expected to report November 5. I expect to hear more about how
management will avoid an earnings cliff caused by Trump Administration
policies. I think the longer we go without a firm takeover offer for
the company, the more likely we can infer negotiations with Blackrock
et al are hung up on price. I think they have to offer at least $18 to
$20. But I also think AES will get there and higher just by continuing
to execute and refuting the bear argument that they won't be able to
grow going forward.
 
Q. Hi Roger:
At your recommendation, I bought AES and have been somewhat disappointed. A short while ago, there was talk of AES being bought out for 38 billion dollars, including debt..... I went to ChatGPT to find out what that would come to in price per share, and it stated that with approximately 712 million shares outstanding, that would mean a price per share of approximately $53.37 - yet AES has been languishing at a price in the mid teens range. I don't understand it.... Could you help explain?--Thanks, Jack A.

 
 
 
 
A. Hi Jack

I think that number being circulated includes debt. My view is a
successful bid would have to be in the 18-20 range. And the fact we
haven't heard anything more since early this month is very likely a
sign that negotiations are stuck--very likely over price.
1:53
One thing we have seen the past couple weeks is a number of brokerages
raising their 12 month price targets on the stock. I don't think those
numbers really mean anything, other than bearish sentiment for this
stock is starting to lift ahead of Q3 earnings and updated guidance
that's likely to be released early next month. The bear case--and why
there's elevated short interest (4.4% of float)--is that AES faces an
earnings cliff as the result of Trump Administration policies. The
company and other renewable energy developers like NextEra Energy
(which reports tomorrow) are saying (1) their ongoing development
pipeline will not be upended by changes in tax policy, (2) they have a
future investment pipeline beyond the expiration of wind and solar tax
credits that's even more robust and (3) whatever happens in politics,
demand for electricity is robust enough to continue to boost the value
of their assets and contracts.
This is what management teams said following Q2 results, when we knew
what OB3 was but before the IRS set tax credit policy. And based on
what NextEra executives and others have said since, I expect it to be
confirmed again in Q3 news and numbers but with a lot more to back it
up. I think that's why the brokerages are raising their price targets
for AES. And I look for the stock to continue its recovery and reward
our patience--with or without a takeover offer.
 
Q. Hi Roger - Down at $6, is DNNGY a strong long-term buy? I know from reading the Report Card that it is trading way below recommended and dream buy prices, but I also see they have announced reorganization and have issued shares recently to shore up their finances. 
 
 
Have the offshore wind hassles in the US and recent dilution been enough to eliminate 75%+ of shareholder value? I thought Orsted was a leader with state support and a strong global business. Are the business and stock very likely to rebound given some patience, or would this be trying to catch the proverbial falling knife?
Thanks!
Dan N.
 
 
A. Hi Dan

I think the selloff in Orsted is overdone. And I don't think the
company is going anywhere, given its largest shareholder is the Danish
government and the fact it also has the backing of major shareholder
and partner Equinor--also Danish government backed. The company's
power infrastructure is integral to the country as well.
1:54
The company does have a liquidity challenge. And as a result, it's
been forced to take financing on less than favorable terms that have
been highly dilutive to the share price. That stems from the long-term
development plan, which while reasonable and not particularly
aggressive did have a weakness: It depended on cash flows from
completed, fully contracted projects supplementing financing needs of
projects still under development. And when the US projects began to
come in more expensive than expected--in large part because of rising
interest rates starting in 2022--those cash flows failed to
materialize.

The construction delays triggered by the Trump Administration's
actions have forced an even deeper retrenchment than the one the
company launched a couple years ago, when it suspended its dividend.
And even though work on Revolution and Sunrise is continuing--and it
looks like they'll come on stream next year--it looks like a
turnaround is going to take a year or two longer than the 2026-27 time
frame
management was projecting before.

Orsted, however, does have strong financial backing and the assets it
operates under long term contract are used and useful. The failure of
its initial strategy is just the latest cautionary tale for power
plant developers--and good reason to keep a sharp eye on other
companies with similar strategies for similar signs of weakness. But I
think Orsted is pretty much deep value at this point for very patient
investors. One possibility of a faster payoff--a merger with Equinor,
though there's no indication to date a deal is being contemplated.
 
Q. looking at news today, I look forward to your commentary on the AWK buyout of WTRG. I'm surprised the premium was only 5%, so that sounds like a merger more than a buyout. I'd just started rebuilding my stake in ARTNA and was considering some HTO.—Dan N.
 
A. Yes, I think this is a real utility merger to create a larger,
stronger company with greater scale to grow faster--and I'm encouraged
we get stock rather than cash, and so an
opportunity to play upside!
It looks like they'll sell the natural gas utility piece.

I think they could face some regulatory challenges getting this
done--starting with the number of states that must approve. But I
think this will encourage other deals in the water sector, very likely
with HTO involved as they're going to be #2 now behind AWK/WTRG. I did post an alert on the Essential/American merger earlier this week for Conrad’s Utility Investor readers and will have further analysis in the November issue, which posts on the 10th.
 
Q. Hi. I have BSM (Black Stone Minerals) for gas royalty, and stumbled across two other names. Do you have any opinion on Kimbell (KRP) and Topaz (TPZEF)? Looking for other gas heavy royalty names with potential. Thanks--Frank F
A. Hi Frank

You might want to check out Freehold Royalties (TSX: FRH, OTC: FRHLF),
which is Canadian and has an excellent long-term track record paying
dividends in all environments. There's also Prairie Sky (TSX: PSK,
OTC: PREKF), which was spun out
1:55
of the former Encana some years ago
(now Ovintiv--TSX: OVV, NYSE: OVV).

The game with all of them is pretty much the same--where are the
reserves, who are the companies drilling on their lands and what's the
price point where those producers will step up their output. You have
to be ready for lower prices to cut into dividends. But they will
share the wealth. I think BSM has a pretty good plan for doing so,
which is why we have that one. But these others will also win big on a
recovery in prices.

We do periodically report on royalty trusts. Expect a future article
in Energy and Income Advisor.
 
Q. Hi Roger,
Is this conservative or aggressive? The First Rate Reits listing says "conservative" but the listing of all the reits says "aggressive".
Thanks--Teresa P.
 
A. Hi Teresa

Thanks for pointing that out. I think CubeSmart is overall in a
conservative business--self storage--which is coming out of a cyclical
slump as new supply is absorbed and the pipeline of supply for the
next 2-3 years is quite thin. It
also has solid financial metrics,
including credit rating and distribution coverage. I would say that
ExtraSpace (NYSE: EXR) is probably a more conservative player in the
space.
 
Q. Hello Roger:

In the latest REIT sheet, regarding ARE

"Seven company insiders have made meaningful purchases of the REIT’s
shares since the beginning of the month. That’s a very good sign
conservative, long-term investment plans are on track, while the balance
sheet remains strong. Alexandria continues to trade at a steep discount
even to its Dream Buy price, yielding nearly 7 percent. Buy if you haven’t."

I checked ETRADE an also the ARE website. It looks like all the
purchases were for a price of zero, which I think means exercise of
options. Is that right? I've always heard exercise of options for zero
price doesn't mean much as compared to someone actually buying shares at
market price.

regards, Kerry
A. Hi Kerry

You can access insider transactions history on the SEC's EDGAR
website. I'm not sure how timely reporting may
be in the coming weeks
because of the federal government shutdown. But there is a great deal
of information provided in the filings--and yes the Alexandria
transactions include a number of options being exercised to buy stock.

I consider insider transactions that increase holdings to generally be
a sign of management confidence. But they're absolutely no guarantee a
stock is going up or that favorable developments are ahead--just that
these people who work there are going to own more stock, which should
align their interests with ours.
As we saw with the news on Alexandria REIT this week, insiders
increasing holdings doesn't mean the company can't report bad news.

In this case, the life sciences office property leader reported
results that show weakness in its business--as biotech firms pull in
their horns with the federal government shutdown and threatened (and
real) research funding cuts. Rents are still rising as is portfolio
quality with the Lilly deal this fall. And occupancy is still north of
90%,
1:56
which is exceptional for office as a sector. But management did
reduce its end year expectation for occupancy and by extension cut its
2025 guidance for funds from operations (FFO). And it also warned of a
potential dividend "re-set," possibly as soon as the next payment.

I still believe the underlying fundamentals of this REIT are solid.
And at its current price, it's pricing in a dividend cut already. On
the other hand, this dividend cut warning was a surprise to me, given
that even at the lower guidance the earnings/FFO and balance sheet do
continue to support the dividend at the current rate. So I'm cutting
this REIT to a hold until we can get a better assessment of
management's intent. On the positive side, there are signs of a
turnaround in the business. It's just a little less clear with the
government shutdown especially how long recovery is going to take and
when occupancy rates will stabilize. But I'm not inclined to sell on
this news either.
 
Q. Dear Roger, In the event that the Ai-fueled market
rally stalls and investors question all that capex being deployed in the Magnificent 7, what might happen to stocks like BEP and ET, which have based quite a bit of their future growth on data- center energy demand that is dependent on AI capex? Many other utility stocks also seem to be in this who-know-when situation? Any thoughts on this? Many thanks, Jeffrey H.
A. Hi Jeffrey
 
When it comes to energy companies serving growing Big Tech demand, it’s all about the contracts. Mainly, no one is going to build anything for anyone without long term assurance of demand—and cash flow. And in fact, solar, wind and storage can literally be up and running in 12-18 months—so companies like BEP are literally able to build to meet demand almost in real time.
 
Obviously, if AI demand winds up being less than anticipated, there will be fewer contracts. But BEP is not a one trick pony—Westinghouse of which it owns 51%—is winning contracts around the world to build new nuclear. 
 
Same with Energy Transfer with natural gas
midstream infrastructure. Their data center exposure is with smaller companies than BEP—which has major deals with Meta, Google etc. But the larger part of their growth is with LNG.
 
Bottom line—these companies have a real opportunity to serve AI demand. But they have other places to invest to grow as well. And their stocks are still relatively cheap—not pricing in much AI growth if any.
 
I would say that Constellation, NRG and Vistra as stocks are very leveraged to AI. And if the boom should be seen to fizzle, I think there would be quite a bit of downside. But BEP and ET are still very low risk ways to bet on AI. So are AES, NEE, CWEN and most utilities in general. Even Dominion isn’t getting any credit for being an AI play, mainly because people are still worried they won’t get the Coastal Virginia Offshore Wind project up and running.
1:57
Thanks to everyone who sent those questions. Now let's get to some live ones.
Dipak G.
2:04
Hi Elliot and Roger,
PAA, and not PAGP, made the Top 10 list of energy companies in your recently- published Energy Bulletin even though the underlying assets of both companies are the same. Any reason for your preference of one over the other besides PAA being a MLP provides tax deferral as well as double-taxation avoidance but comes with the headache of dealing with K-1 tax forms?
Best.
AvatarRoger Conrad
2:04
Hi Dipak. I wouldn't read too much into that choice. PAA and PAGP are basically two ways to bet on the growth of Plains--Plains GP Holdings' only asset is shares of Plains All America Pipeline. The cash dividend amount is the same as is ownership--and any successful takeover of Plains would have to include buying all the units of PAA and the shares of PAGP.
In this case, PAA looked like the more attractive at the time we put together the Energy Bulletin portfolio--as it trades for almost $1 a share cheaper. So your yield is almost half a percentage point higher.
This is not the most extreme discount of an MLP share versus a C-Corp for the same company (BEP is $12 cheaper than BEPC). But it's a lot to pay for not having to file a form K-1.
Dipak G.
2:11
Hi Roger,
Which companies ( primary as well as secondary players) are the likely beneficiaries of the needed investment in the upgrade and expansion of the electric grids even if the hyped, projected demand for AI-driven electricity generation and distribution do not materialize? Thanks. 
Best
AvatarRoger Conrad
2:11
The surest beneficiaries are the owners of the power grid itself--mainly regulated electric utilities. Regulator-approved investment goes right into rate base, increasing earnings and ability to grow dividends. Also, NextEra Energy (NYSE: NEE) owns the leading non-utility developer of transmission infrastructure--in addition to being the lead investor in Florida's power grid.

If you're interested in services and manufacturers utilities might use, realize that this is a competitive business. But there are a handful of giants that dominate--including GE Vernova (NYSE: GEV), though it's up a lot. I also like Itron (NSDQ: ITRI), which I track in CUI. It's heavy on the software side, a bit expensive currently though. Having US factories to serve the US market is going to be very important for these companies in an era of unpredictable import tariffs.
JerJos
2:18
Comments on todays WSJ write-up on CRK as Unlocked a $100 Billion Gas Bounty?!?
AvatarElliott Gue
2:18
To be honest, I think it's old news. Jerry Jones, who controls 70%+ of CRK, has been highly supportive of, and bullish on, the prospects for the Western Haynesville for some time and supported CRK through years of low gas prices when they were struggling with weak operating cash flow. CRK now controls an enviable acreage position in the region and they announced some solid well results earlier this year. The geology in the western Haynesville is more complex than in the fairway of the play to the east in Louisiana; however, CRK has been getting those costs down and I think it's a valuable asset though I am not sure about the $100 billion bit referenced by Mr. Jones. We like CRK though we see it as more of a trading vehicle -- something we've recommended trading in both our Elliott's Options and CT Trader services this year. For longer-term investors, we still like Expand (EXE)'s position in the core of the eastern Haynesville.
Frank F.
2:19
Hi

Confused about the recent nuclear announcement. The news media keeps highlighting Cameco CCJ and Brookfield Asset Mgmt BAM. I thought it was BEP 51% / CCJ 49%, but CCJ went up over 23% on the announcement, and BEP only moved 5% higher, even BEPC was only up 6%. Why no mention of BEP in the news releases or analysis?
AvatarRoger Conrad
2:19
Brookfield Asset Management is the effective parent and lead shareholder of Brookfield Renewable--and that association is also a not so secret ingredient of BEP's ongoing success, as it provides access to a deep pool of private capital. BEP has an investment grade rating based on its own finances. But the BAM association has arguably allowed it to grow far more rapidly and globally than would otherwise have been possible. And BEP is BAM's power investment company, so yes it is the direct beneficiary of this extraordinary US nuclear subsidy.
I suspect Cameco got a bigger bounce because it's a double play on this deal--being the leading non-Russian uranium producer and 49% owner of Westinghouse. But I think BEP/BEPC will probably benefit more if and when any new US reactors are built using Westinghouse's AP-1000 or the smaller SMR models.
I do think this is a big deal. But I also think the investor reaction at this point--while understandable given the hype around nuclear now--is a bit overdone for CCJ.
AvatarRoger Conrad
2:22
Continuing on the nuclear power question: The last new nuclear plant built in the US took well over a decade to get up and running (Vogtle 3 and 4). And despite all this US government spending, there's no commercially available design for SMRs, or large unit that a utility can be sure of its final cost--until there is, there won't be any real orders, just a giant taxpayer funded government program.
2:23
I feel good owning Brookfield as a way to play US nuclear, mainly because so few are giving it any credit for having a play. It's all upside with little risk. The opposite is true for most of the other nuclear stocks being hyped right now.
Dwayne E.
2:27
Roger, with the recent legal loss, is VG still a buy? I have a small position, is it wise to add to that position? Thanks
AvatarRoger Conrad
2:27
Hi Dwayne. We think there's a solid value proposition beyond the legal risks with Venture Global. Their development process works and is far faster than what rival LNG facility companies have been using. And earnings due out November 10th are going to benefit from the startup of the Calcasieu Pass facility earlier this year. The legal liability from the most recent case was actually pretty much in line with what management had been guiding to at the beginning of the year. It was reduced when they won the first case and is now back where it was after they lost the second--which was a surprise given how similar it was to the first.

We don't generally recommend averaging down in stocks that have dropped. But we do continue to recommend VG for patient, aggressive investors.
Jimmy
2:33
Long timeE&I new to smart bonds. I have owned PFF for sometime You are recomendind PFFD They have similar holding.Which is better? I also have PFFA.which has struggled laely, any comments.
AvatarElliott Gue
2:33
Thanks for the question. We favored PFFD over PFF because the former has a slightly lower expense ratio of 0.23% against 0.45%. However, the two ETFs have similar exposure as you noted. The biggest difference is that PFF owns some hybrid securities (bond/preferred hybrids). PFFA is an actively managed ETF that employs leverage to juice returns and yields. We generally shy away from actively managed ETFs as we actively manage exposure within the Smart Bond portfolios. As we wrote about in the lasty issue/update most US-traded preferreds are issued by financial companies including banks, insurance companies and private equity firms. The latter category -- private equity -- has been a drag on performance for the broader preferred universe so far this year due to swirling concerns around the private credit market. So, that's hurt all of the ETFs you mentioned -- PFF, PFFD and PFFA -- to some extent this year though they're still producing solid gains over trailing 1 to 2 year holding periods. That's one reason
AvatarElliott Gue
2:33
why we recommend PFXF, an ETF which owns preferreds issued by companies outside the financial industry. Returns in that ETF have been superior this year. We believe it makes sense to own a mix of PFFD and PFXF with the latter providing some real diversification in the asset class from the more common financial-focused preferred ETFs like PFFD and PFF. Also note that we recommend a variable rate preferred ETF as well, which offers diversification relative to the fixed-rate dominated PFFD and PFXF.
Jack A
2:35
Hi Guys:

I'm disappointed with the performance of South Bow. For a long time the price went nowhere, and recently the stock has taken a hit. Do you know a reason for the recent downturn in price? Although it does offer a nice yield, is there much future in its performance? President Trump doesn't seem to be interested in extending the Keystone XL Pipeline. My guess is he's not eager to send U.S. dollars to Canada. Your thoughts? Thanks.
AvatarRoger Conrad
2:35
South Bow is still up about 18% since the spin off from TC Energy late last year--about 10 percentage points better than the Alerian MLP Index. And based on operating results so far, the company will be able to deliver on pre-spinoff guidance for low single digit increases in its dividend, which is already pretty close to 8%.

As we've noted in EIA, this has been mostly a consolidation year for midstream stocks in general after four years of upside. The main reason has been soft commodity prices, which have raised concerns 2025 will repeat 2015. But the midstream sector now is in a far better place now than then, with lower debt and more secure cash flow--and that includes South Bow, which is about 90% Keystone XL EBITDA.

I think it's still possible the Keystone northern extension is revived. But a recent news item indicating South Bow is collaborating with the Canadian government and major producers on another Alberta-to-BC pipeline may indicate another direction.
AvatarRoger Conrad
2:37
Continuing on South Bow, I think as a small midstream it's still a takeover target--but it will grow its dividend on its own with a low risk investment strategy and strong balance sheet.  The stock did for a time rise above my highest recommended entry point of 28. And it's dropped back from there pretty much in line with other midstream stocks--back to a good entry point for anyone who doesn't already own it.
Jack A
2:43
Hi Roger:

Next Era Energy went up a lot pre-earnings release, and then took a hit after the earnings release. What are your thoughts as to the cause? Thanks.
AvatarRoger Conrad
2:43
I really wouldn't read a lot into it. Utilities as a group were down that day--as were a large number of other dividend paying stocks across industries. NextEra is the most widely owned utility stock at 12.4% of the XLU (SPDR Utilities ETF) and a market cap of nearly $170 bil. It's going to get sold on days when utilities are as a sector.

There were, however, only positives in the Q3 earnings release and guidance--which included a new deal with Google to reopen the Duane Arnold nuclear plant by early 2029 as well as to deploy advanced nuclear elsewhere. All guidance ranges were affirmed and investment targets were met--including 3 GW plus of new orders at the unregulated unit (mainly energy storage). And management affirmed the earnings impact of investment through at least 2030.

I will also say that NextEra is still trading a few dollars higher than my highest recommended entry point of 80--it's still a little expensive and I would wait for a pullback to that level before buying more.
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