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12/18/25 Capitalist Times Live Chat

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Alex M.

2:42

Hi Roger. Do you see DLR as being a direct beneficiary of the AI build out and momentum? The earnings growth (FFO) forecast doesn't seem too stellar at the moment. Thanks.

Roger Conrad

2:42

Hi Alex. Data center REITs were red hot in 2024 but stocks have cooled in 2025--as investors have focused more on costs, including energy. So far as orders are concerned, you can check out the "Comments" column in my REIT Rater for all the bigs--DLR, EQIX, IRM as well as AMT--and you'll see they basically have all the new business they can handle, And it seems obvious Big Tech would rather not be in the business of owning data centers or providing electricity to them--DLR signed big contracts with NVIDIA and Oracle in the last six weeks.

The key is translating that sales growth to FFO and dividends. DLR did post Q3 FFO 13% ahead of last year, which is extremely robust for a REIT--though no change in the dividend since March 2022 as cash goes to fund CAPEX.

My view on data center REITs is they got bid up too far, too fast on AI hype. The growth is real. But except for IRM and AMT--which also has cell towers--I think we're still waiting for prices to come back enough to buy.

Alex M.

2:44

Any thoughts on the gold income ETFs that write covered calls (IGLD, IAUI)?

Elliott Gue

2:44

Generally, I like covered call ETFs on assets that I expect to trade sideways or to rise slowly. That's because when you sell a covered call you are basically giving up potential upside from owning the asset in exchange for up-front premium income (and yield). In an asset that's basically trending higher in rapid fashion -- ie gold and silver -- I think covered calls are sub-optimal because it means you're likely to called away a great deal. And when assets that are rising as fast as gold and silver are lately do finally turn lower, it's usually not a gentle decline to say the least. In that scenario, the covered calls aren't going to protect your downside much. A good example of a covered call ETF we do like -- one I have recommended in both Creating Wealth/ Free Market Speculator and Smart Bonds -- is the iShares 20+ Year Treasury BuyWrite ETF (TLTW), which is up 11.6% this year, outperforming a roughly 7% gain in the broader US bond market. TLTW owns units of TLT, which is a long-term US Treasury Bond ETF

Elliott Gue

2:44

and sells calls on that fund about a month out and just out of the money. Since long-term Treasury yields have been only drifting lower this year, covered calls provide a way to generate more income out of an asset that's basically rangebound. That's why TLTW has worked.

Frank

2:50

I have a Canadian Royalty Co. (Freehold) in an IRA and would like to add some others but keep on hearing about IRS #8621 "Canadian Passive Foreign Investment". I've never been approached by the IRS or my broker. Is this a concern for US investors in a tax advantaged account?

Roger Conrad

2:50

Hi Frank. Since I started covering Canadian energy and then other sector stocks, there's been extreme confusion about dividend taxation. And you can pretty much count on brokers taking an extremely conservative line on withholding tax--which is supposed to be 15% for taxable accounts and 0% for IRAs but which I've heard from some readers can be as much as 25-30% at some brokerages--unless you go to them and complain directly.

I'm not a CPA. But the unwritten rule with IRA accounts seems to be that so long as the unusual item in question is under a certain amount account wide, no one pays it attention. I would also point out that we've recommended US royalty companies BSM and DMLP in Energy and Income Advisor--same animal, same returns, no question of IRS #8621. But I do like Freehold, which we cover in EIA in the "Canada and Australia" coverage universe.

Lawman

2:56

Many talking heads have predicted the price of crude to continue to decline. What are your thoughts about the short, medium, and long term outloook for crude? Do you expect EV's and renewables to be a headwind for the price of crude?

Elliott Gue

2:56

We wrote about this at some length in the issue of Energy & Income Advisor that went up today. To summarize, everyone is bearish on oil right now -- Wall Street is generally projecting low oil prices through 2026 with some forecasting dips into the low $40s early in the year and futures market speculators are as bearish as they've been at any time since at least early 2010. When sentiment is that bad, it's a contrarian buy signal. Historically collapses in oil prices happen when sentiment is bullish not bearish (this was the case in 2014 and mid 2008 for example). When everyone hates oil -- like late 1998/early 1999 and 2020 -- it's time to look for a bottom as the market is already pricing in most of the bad news. We're getting a similar signal from the strong outperformance of energy stocks relative to oil itself -- as we covered in today's issue as well as in response to an earlier question in today's chat, energy stocks generally outperform oil near lows for energy/oil. In the short -run the maximum risk

Elliott Gue

2:56

for oil prices is really Q1 2026 when weak seasonal demand will leave the market most oversupplied. I still think downside is rather limited from here. Balances should then improve into mid-year and even more so into the second half. Also, we see US (and non-OPEC) production rolling over while demand remains robust through 2026. Longer term, the world needs oil $80+/bbl to incentive enough new production to meet growing global demand. Renewables are intermittent sources of energy and have struggled to gain significant global share with the Big 3 -- Oil, natgas and coal, accounting for 83%+ of global energy supply only slightly since 1990. Light vehicle transportation only accounts for 25% of global energy demand and EVs will take 15+ years to offset significant light vehicle demand in my view. Em markets, India in particular, will more than offset any decline on oil demand from EVs in more developed markets.

harry

2:57

thoughts on CHORD? analysts have it as a buy with a price target of 130. Its trading in the 90's

Roger Conrad

2:57

Hi Harry. If there were a vote for "most useless stock market indicator"--my vote would go to research houses' 12-month stock price projections. A service I use "Koyfin" actually tracks these projections for individual stocks. And the averages always follow the share price up or down, usually with a few weeks delay.

That said, I do like Chord, which pays a generous and well covered base dividend, has a solid portfolio of properties since acquiring the former Enerplus, and has been managing the feat of boosting output while cutting production costs and CAPEX. Dividends were 69% of free cash flow in Q3 at depressed oil and gas prices--leaving room to cut debt, buy back stock and make acquisitions. The market is bearish on oil and the stock is down. But I think it's a solid value for the dividend, which can grow quite a lot when oil prices rise as we expect.

Lawman

3:01

What are you short, medium, and long term prospects for nat gas?

Elliott Gue

3:01

We did a deep dive into natural gas last month for Energy & Income Advisor. Short term natural gas prices are dependent on weather conditions this time of year because heating season -- centered on late December through late February -- is by far the most important season for gas in the US from a demand perspective. So, it's all about the weather models -- when they turned "cold" for mid-December back in late November gas prices soared to well over $5.25/MMBTu, when they turned warmer through Christmas/New Year's, gas slumped under $4/MMBtu. In a week or so we'll start to get a more meaningful look into mid-January and if the models are cold don't be surprised if you see gas back up over $5. Intermediate and long-term, I think we need gas averaging $4/MMBtu+ to meet growing demand for LNG exports and growing domestic demand.

Dudley

3:09

Merry Christmas to all! What am I missing? Cushing Midstream (SRV) is a CEF that just went through rights offering so I understand the dilution aspect. However their top 10 includes names like ET, Targa Resources, MXLPX, Hess, GEV, ENB and OKE and currently sporting 16% yield wit monthly pmts. Again please heal me understand what I am missing. Thanks, Dudley.

Roger Conrad

3:09

Hi Dudley and Merry Christmas to you as well.
For 10 years, I was an independent director for the now (unfortunately) closed Miller Howard High Income Equity. The manager followed a rule to never pay a dividend higher than its definition of what amounted to investment income. That was a differentiator from other closed end dividend stock funds--which basically pay distributions from any available source management deems available including capital gains. The thought was this would be a more secure way of paying dividends and would differentiate the fund. I think it helped with the launch. But end of the day, most investors don't take the time to see what went into paying a dividend--until it's cut.

It's also worth pointing out that when a fund publishes its holdings, it's providing a snap shot that for many funds is several weeks old by the time it's available. So we don't really know what's in there. What we do know is those stocks you named pay yields about half that--which tells me two things.

Roger Conrad

3:10

First, this fund uses leverage to make its return--it borrows against the holdings mainly, and second it trades at a discount to net asset value because of the leverage.

3:12

Management has decided to pay this level of dividend since late 2022. But no one should count on it continuing at that rate indefinitely. That's why I like individual stocks--I always know what I'm getting and I get to hold what I want.

Lawman

3:12

Do you favor gold over Bitcoin, and, if so, why?

Elliott Gue

3:12

I wrote about this over on my Substack at more length -- the full article is available here:

https://open.substack.com/pub/freemarketspeculator/p/digital-gold-or-r...

Simply put, there is no correlation between the price of bitcoin and gold. Bitcoin is more correlated to the Nasdaq and risk appetite whereas gold is correlated to a number of factors including the dollar index and real interest rates. As I said earlier in the chat, I think we may see a period where tech/growth and the Nasdaq underperform the broader market, so I'd say that's generally a negative for bitcoin/crypto. We remain bullish on gold and silver and have been for some time now. I would caution that in our trading services, we've been recommending readers take stops to lock in gains on our gold and silver trades. For example, in my Elliott's Options trading service, we've been long call options on SLV for some time now. The way I've been trading it is to "roll" our long call

Elliott Gue

3:12

exposure up and out over time. So, today for example, we took a profit on some of the iShares Silver (SLV) $55 calls we recommended and rolled into the $60 series on the same contract month. Since the $60s trade at a lower price than the $55s, this allowed us to book a nice gain in the $55s and reduce our risk in the trade. In CT Trader, our tock and ETF trading service, we sold half our recommended position in SLV some weeks back for a gain over 50% and will likely look to peel off a bit more into strength. For longer-term services like Creating Wealth / Free Market Speculator, we've recommended taking profits on partial positions in names like GLD, SLV and WPM but still maintain some upside exposure. My targets are silver at $100/oz+ and gold at $6,000+ but it's prudent for both traders and investors to take some money off the table on the way.

Lawman

3:19

How would you rate AETUF against American based majors?

Roger Conrad

3:19

Hi Lawman and Happy Holidays! ARC Resources is a company I've covered for about 25 years now. The primary appeal is a long history of producing gas and liquids (NGLs, oil) at low operating costs, a large presence in the Montney and Duvernay shales that are proximate to rapidly expanding Canadian export capacity on the Pacific Coast, a strong balance sheet, a sustainable dividend policy including a 10.5% boost for January and a share price and dividend priced in Canadian dollars--which has risen vs the USD this year giving US investors a boost. Primary risk is lower energy prices. It's currently a buy in our Canada and Australia coverage universe.

By comparison with major US independents like EOG, ARC is a smaller company ($10 bil market cap) and more geographically focused (Canada). Also returns will be affected by the CAD/USD exchange rate.

Lawman

3:23

What do you expect the Venezuelan situation to impact Chevron, and the future price of crude?

Elliott Gue

3:23

Short term, if Venezuelan crude oil flows are disrupted, it's mildly bullish because it will reduce the oversupply of oil into Q1 2026. Longer term, let's say there's a change of government in Venezuela and traditional US operators like Chevron were able to re-enter the country and resume their operations there. Maybe a modest tailwind for Chevron (which is already a company we like) but I just don't think that's particularly meaningful for the global oil market. Venezuela produces under 1 million bbl/day of oil and the government's mismanagement of energy assets means that they've damaged their fields and infrastructure over the years. It will take several years of stepped-up investment and American technology/expertise for Venezuela's output to see significant upside from current levels. So, little or no impact on oil prices. The biggest beneficiaries in my view would be US Gulf Coast refiners like Valero, which could use more heavy Venezuelan crude to optimize their refinery efficiency.

Susan P

3:27

Haven't done justice to Roger's most recent REIT publication, but noticed Realty Income was mentioned, a current holding of mine. Wondering what you think about its peer Agree Realty(ADC)? Have read opinions that suggest the latter has more growth potential than O? Thanks for your thoughts on ADC versus adding to the O position.

Roger Conrad

3:27

Hi Susan. I'd been looking at Realty Income for a long time before I added it to the First Rate REIT list--finally put it on when it seemed to settle at a good price. And it's up nicely since the rec, outperfoming the REIT sector by a considerable margin. I'm very comfortable with the management approach on risk and expansion, the balance sheet and dividend policy.

I do cover Agree. It's up about half what Realty Income is this year and yields about a percentage point and a half less. ADC is also about one-sixth the size of O--which I do not see as an advantage at a time when ability to raise low cost capital is critical, and long-term rates are still high. I do rate Agree a buy up to 80. But choosing between the two, I'm more comfortable with Realty.

Hans

3:27

Elliott, What is your thought on BP with all the changes they are making. Thanks

Elliott Gue

3:27

I'm encouraged. They've been gradually moving away from their disastrous energy transition strategy since early 2024, announced a full startegic reset in February and now have a new CEO (who spend some time at XOM by the way). I suspect she'll continue or accelerate the pivot back in favor of oil and gas and BP has some attractive assets, particularly in the Gulf of America and also Brazil. We still recommend XOM and CVX in then model portfolios as out favorite supermajors but are encouraged by the moves at BP.

Lawman

3:34

How would you rate TTE total against other majors?

Roger Conrad

3:34

TotalEnergies differentiates from other super majors on several counts. The stock is priced in and the company pays dividends in Euros--so there's an opportunity to take advantage of US dollar weakness (a big benefit this year). The company has a multi-year strategy to grow oil and gas output at least 4% a year through 2030 and operate 100 gigawatts of renewable energy resource by the end of the decade. And unlike BP, Shell and others--which have zig zagged back and forth between going all in on zero fossil fuels growth and all renewables and back--it's been consistent. So as a result, it has a power business where cash flow is not tied to commodity prices, and oil and gas output is still growing. It also has a major LNG presence and has done well in Africa where other companies have not.

I like TTE and rate it a buy up to USD70--also like CVX and XOM the US majors, less bullish on BP and SHEL.

Victor

3:39

Hello Elliott, It seems that VLO will close its refinery in California and take a $1B write off. What is the impact on the stock price? Others are also exiting California and I read in the news that gas prices are expected to increase much higher by the summer of next year. Your thoughts. Thank you.

Elliott Gue

3:39

The move to close the refinery in CA was expected -- I think they first discussed it maybe 2 years ago on a call. The California legislature tried to pay VLO to keep their facility open for a bit longer, but I don't think anyone felt they'd go for that. California is extremely short of refining capacity with recent and upcoming closures. They're already having to import refined products and take advantage of the so-called domestic bypass to obtain supply from the US Gulf Coast. For those unfamiliar, the "domestic bypass" trade is basically the product of a series of government regulations. Basically, Gulf Coast refiners don't like to refined California gasoline because it expensive to do and the market is limited -- they have to retool their operations to produce it. Also, because of the Jones Act (passed in 1920 to benefit Seattle shippers to Alaska) it's expensive to ship refined products from one US port to another and California can only handle waterborne imports due to the lack of pipelines. So,

Elliott Gue

3:39

what happens is that they ship refined products to the Bahamas where it's loaded into a storage terminal and blended just enough that they can re-export it to California from the Bahamas while getting around the high shipping costs imposed by the Jones act. This is a major reason why gasoline prices are so high in California compared to other US states and ongoing refinery closures will make the problem worse over time.

Jim

3:47

I have been looking at these new weekly dividend payers. nvdw, plty, hoow. They are springing up very fast. Must be over 100 now. Have you looked at these and found any to be worth a small investment?

Roger Conrad

3:47

Hi Jim. Since it's basically impossible to project weekly earnings (which are basically meaningless), what you have here are basically companies that are dividing up what they'd pay quarterly into weekly increments.

I do think anyone who buys these things needs to be aware of what's inside. NVDW for example owns shares of NVIDIA, along with Treasury bills and "weekly pay swaps" tied to NVIDIA. It's popular at $105 bil. But it has been pretty volatile, as it follows the price of NVIDIA stock--the most expensive and heavily owned stock in market history. Not exactly a regulated utility.

Roger Conrad

3:48

Bottom line: Buyer beware

Lawman

3:57

Do you have any take on Archrock (AROC), Nu Holdings (NU), and BKV Corp (BKV)?

Roger Conrad

3:57

BKV is a regionally focused natural gas producer--Barnett Shale and Marcellus. It also has some electricity investment in Texas. There no dividend but management is buying back $100 mil in stock--so exercising shale discipline and returning cash to shareholders. I thought Q3 results were solid. And the company will do better on higher commodity prices--also a potential takeover

Archrock also had a solid Q3 and is buying back stock. And it raised 2025 guidance, reflecting generally solid conditions in the natural gas compression market. It's also a potential takeover in a consolidating sector--USAC is buying J-W Power in a deal set to close Q1 that will add to Energy Transfer earnings without that company having to issue equity or debt.

We don't as yet track either company. Thank you for bringing them to our attention and Happy Holidays.

clathrop505@gmail.com

4:03

New around here tho hearken back to the Personal Finance days as well. Somewhat confused re your current offerings. Seems like you have many newsletters and services but I don't see a place to look at your full offerings. Just want to be sure I'm in the right place. Not crazy about MLPs b/c of aforementioned complications.

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