JotCast | 11/26/24 Capitalist Times Live Chat

Return to

11/26/24 Capitalist Times Live Chat

powered by

Prev Page View Full Chat

Alex M.

6:27

Hi Roger. UGI has really ripped higher after releasing earnings. Any thoughts on what was said? Thanks.

Roger Conrad

6:27

I think they indicated pretty clearly that the Amerigas rebound is happening faster than they had guided before.

Guest

6:27

Hi Roger: Thanks to you & Elliot for the chat. In the past you

Roger Conrad

6:27

Thank you for joining us today--it's been a lively chat and very helpful for us.

Alex M.

6:29

Hi Roger. Why do you think certain utilities like ES and EXC have missed out on the broader utility rally over the last year?

Roger Conrad

6:29

I think it's because they're pure transmission and distribution utilities. It's a very steady business model that produces reliably growing dividends. But the excitement has been in generation companies that can sell output to feed AI.

Guest

6:32

(Continued from above) You have recommended NEM. Do you like GOLD especially at its current reduced price? Do you expect any future joint ventures with NEM? Thanks, John

Roger Conrad

6:32

I don't know if I'd go so far as to say gold is selling at a reduced price--at $2,600 plus it's still more than $500 per once higher than it was in February. I don't think Newmont ever really priced in $2,800 per ounce gold in any case. I do think it will eventually, however. And I think Newmont as the largest gold producer in the world and a major copper producer as well will pursue more joint venture when they have the potential to cut production costs and lift output. It's still a buy up to 50.

Elliott Gue

6:34

One more from the mailbag: Finally, is there a realistic market for US shale producers to refill the SPR under Trump? (I know Biden drained it in time for the last midterm elections, but haven’t seen much coverage of it in a year or so.) There was proposal to set an oil price floor by refilling the SPR at a price that would be generally supportive for producers and beneficial for consumers (ultimately dampening the swings in gasoline prices). The Biden folks never seemed to be able to get this together, but it seems like something the Trump team would embrace. The idea was that the right SPR contract price would be supportive of energy companies (while helping them plan/maintain their capex discipline) and give the new administration the tool of being able to use the SPR (again) to reduce any rise in gas prices going into the midterms.

Answer: Yes, I had quite an argument with some people on X/Twitter about this back in 2022. My view was, and remains, that the US government is a terrible commodity trader.

Frank

6:34

I am a long time holder in Williams Co. and I believe you have a "Buy Under" price of 38. It's been as high as 60 recently. What guidelines do you use to determine when to take profits?

Roger Conrad

6:34

Hi Frank. I think we're at that point now, as we are for ONEOK at a price of $110 plus--not the whole thing. These are strong companies and their stocks are still likely to go even higher as this energy cycle progresses. But they've come a long way in a hurry. And with Williams yielding barely 3% at its current price (OKE at 3.5%), the MLP midstreams are far better buys.

Elliott Gue

6:35

From the end of January 2021 through July of 2023 they sold roughly 291 million barrels of oil from SPR, taking this reserve back down to the same levels as 1983.
That increased US supply and probably acted as a headwind for oil prices. However, that’s the easy part – you sell oil from SPR, push down the price of oil and people are happy because gas prices come down.
But when you “short” something you don’t make money until you cover your shorts (in this case buy back oil for the SPR). (Also, generally, when you’re bearish and trading something in huge size the last thing you really want to do is send out a press release saying you’re going to cover your shorts at $70/bbl.)
That’s the hard part – following through on a pledge to buy oil at lower prices. Buying back oil for SPR will tend to increase demand and push prices higher. Also, by communicating a specific price level where you intend to buy (as DOE did) you put a price floor in for crude at that level.
So, no surprise in my view, they have only

bought back a paltry 42.5 million barrels of oil since the summer of 2023 despite the fact oil has been below their “buy” price on multiple occasions. Now, my understanding is that they’ve also run out of authorizations to buy back more oil.
My guess is that A Trump Administration will generally be inclined to buy back oil for SPR (especially given the incoming head of DOE). But, I still don’t think the US government will ever be good at trading oil – I am not sure the original idea of selling barrels to push prices down on rallies and then buying it back at a discount will work out.

John

6:35

Hi Roger: Thanks to you & Elliot for this chat! Do you have an opinion on GOLD? Any update on your recommendation of NEM? Do you think it's likely that they will enter any joint ventures in the future? Thanks

Roger Conrad

6:35

Hi John. My view has been that Newmont will eventually trade north of $100 and that it will pay 3-4 times the current dividend. That hasn't changed.

Mari

6:38

Roger, a few chats ago you mentioned that WBA could be a speculative buy when the conditions change for drug stores. You updated the status of CVS. Does it mean WBA is a speculative buy now? The other question is about OKE-is it time to take profits? Thank you as always for your advice

Roger Conrad

6:38

Hi Mari. If you're going to take a position in that group, I think it should be CVS. Walgreens has been weakened by poor investments and erratic management. And there's still a lot we don't know about what the incoming administration is going to do in healthcare issues.

I do think it's time to take a partial profit in ONEOK and other C-Corp midstreams--if for no other reason than to reinvest in the midstream MLPs that are still deeply discounted. Cash is also a good thing to hold at this point though.

Ed

6:44

I am sitting on some large gains in CEG & VST that I do not want to realize in 2024. Is there any why to protect those with out selling.

Roger Conrad

6:44

Hi Ed. There are actively traded options for both stocks. Buying put options would protect your downside, but they do look fairly expensive at this point, which is not surprising given these stocks have been very volatile.

As for taxes, it's true sales cost you at least 20 cents in taxes per dollar of profit--and possibly a lot more depending on where you live. But you're still banking 80 cents of that dollar--which in a decent selloff of either company will vanish in a hurry.

Things may turn out differently this time. But the currently bidding war for favored sectors like C-Corp midstreams, nuclear power/uranium, data centers etc looks an awful lot like the green energy bubble in the last days of the Biden Administration. Taking a 300% plus profit in HASI in early 2021 for CUI wound up being a decision I wish I'd made with other stocks--including several quite strong on the inside that have kept growing earnings and dividends.

Roger Conrad

6:45

sorry meant to say the green energy bubble in the last days of the first Trump administration.

BKNC

6:46

Thank you for your BCE, TTE and AMX comments. I asked the questions well after the start of the call, so I saw your earlier comments already addressing my redundant BCE question.

Roger Conrad

6:46

No problem. Good questions.

Bonnie Beth

6:47

Hi Roger, I just arrived into chat, and thank you so much for answering my questions earlier about REITS. Happy Thanksgiving and enjoy the holidays! Bonnie C.

Roger Conrad

6:47

Hi Bonnie Beth. Glad you could make it. Happy Thanksgiving!

John

6:50

Elliot or Roger: Please provide an update on Aetuf. Thanks

Roger Conrad

6:50

I think ARC Resources is in great shape. They have a conservative financial policy when it comes to funding dividends and CAPEX. And their very low cost Montney Shale reserves are ideally located to feed Canada's nascent LNG export sector as new facilities come on stream that are serviced by the Coastal GasLink pipeline. I liked the Q3 results and expect more ahead. We're rating it a buy up to USD18 and it's in our Canada and Australia coverage universe in EIA.

Mr. G

6:52

What's your opinion of AES and NEP

Roger Conrad

6:52

Hi Mr. G. I don't have anything really to add to my answers on these stocks previously in the chat--we've pretty much covered them up and down and in great deal. I would just summarize by saying I see enough reason to stick with them at these very discounted prices--and I think recovery is probable. I do not recommend really loading up on any one stock no matter how cheap it looks. But these are worth staying with in my view.

John

6:55

Hi Guys: Precious metals royalty stocks are generally considered less risky than miners. Does the same relationship apply to oil & gas royalty stocks vs E & P companies? Thanks

Roger Conrad

6:55

Hi John. I think it really depends on the mining company. A royalty company is likely less risky than a small independent. But really, it's the established companies in both mining and oil and gas production that carry the least risk for investors in the long term. And in fact, their dividends are generally much more reliable than those of royalty companies, which not only are affected by changes in realized selling prices but also third parties' production decisions.

RBBlum

6:56

Wish one and all a pleasant and safe Thanksgiving . . . And, prayers to those still afflicted by Hurricane Helene.

Roger Conrad

6:56

We would like to second that! Thank you for joining us today and a very Happy Thanksgiving holiday! Already thinking of grilling a big bird.

Elliott Gue

6:58

Thank you very much and a Happy Thanksgiving to you all as well.

Alex M.

6:58

Thanks for hosting these chats. KMI, OKE, WMB... any other candidates for taking some partial profits?

Roger Conrad

6:58

The big nuclear companies that we've done so well with Constellation Energy and Vistra Energy. But really I think we need to consider any stock with a huge profit--data center REITs, or any stock connected to the AI theme where a 20% correction would take a major dent out of your portfolio.

Guest

7:02

Study of long term interest rate cycles support a 70 year cycle top-to-top or bottom-to-bottom, however you want to look at it. Interest rate cycle bottomed +-20 years back so we have a lot higher to go over the next few decades. We are approaching sovereign debt crisis in the US, Europe and many other countries. Yes, interest rates will see-saw up for the next few decades, so real estate (and anything that is interest rate sensitive) over the long haul will go much lower. This is when cash will be king and real estate will be a real bargain. That does not mean that the cycle is not tradeable as swings up and down last for a few years at a time.

Roger Conrad

7:02

My rule of thumb is the bigger the forecast, the more that can happen to send things in another direction. I'm not saying that your study isn't making a good point or that the historical record of governments overspending for decades isn't ugly. It's just that simple bets tend to come out better for investors. And that's generally where we make our bets.

Roger Conrad

7:04

Well that's all we have for today in the queue as well as from emails we received previous to the chat. If for some reason, your question was not fully answered, please drop us a line at service@capitalisttimes.com

Have a very Happy Thanksgiving everyone however you spend it. We'll look forward to chatting with you next month!

Connecting…

Your current subscriptions

None

Register now to continue managing your subscriptions

E-mail Address	Chat Owner	Status	Remove

Enter your email address to be notified when Sherry Roberts hosts a chat