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3/26/25 Capitalist Times Live Chat
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AvatarRoger Conrad
1:50
Welcome everyone to our Capitalist Times live webchat for March. For the newcomers, 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 emailing you a link to a transcript of the complete Q&A tomorrow morning—as these things tend to go for a while. We will continue so long as there are questions left in the queue and from the emails we received prior to the chat.
1:51
Per usual, we’ll start by posting our answers to pre-chat questions.
 
Q. Roger, thanks for your excellent publications and for having these informative chat sessions. Please give me ideas on stock, LP, etc. that DO NOT pay a dividend, but rather grow the investment thru other means such as BRK. Thanks, Dick T.
 
A. Hi Dick
 
Thanks so much for those kind words. Good suggestion. MLPs and REITs are of course compelled by law to pay out a certain percentage of income. But there are plenty of companies that don't pay dividends--instead of payout they utilize payback by reinvesting in their business. Berkshire is probably the best example though--and a stock I've owned pretty much for my entire career stretching back to the mid-1980s.
1:52
We will look into making some recommendations.
 
 
Q. I have a question about Chord Energy Corp (NYSE: CHRD). I know you have a buy recommendation at 170 but do you also have a dream price? Thanks—Jerry F.
 
A, Hi Jerry. We track Chord in Energy and Income Advisor in the Australia and Canada coverage universe. I also feature a table of Dream Buy prices in CUI Plus. Dream buy price is right around where it is now.

 
Q. Where do I find information on investing in your Dividend Premium Service. What is its return over last 1, 5,10,20 years? Thank you.—Dave S.
 
A. Hi Dave
 
Dividends Premium is CUI Plus and The REIT Sheet with access to a Discord chat room where I host "Dividends Roundtable"--all combined into one product. We sell it on the Substack platform.
 
We see the Substack platform as a way to reach prospective new readers far more cost effectively than renting email lists. And we are seeing some success there. But we're not selling anything different there than what you've seen sold through Capitalist Times. As for track record, it's highlighted in every issue of Plus and REIT Sheet--or Dividends Premium and Dividends Premium REITs, respectively, as sold on Substack.
 
 
Q. I think there is an error in your charts…doesn’t this fund pay dividends monthly instead of quarterly?—Jeff C.
 
A. Hi Jeff
 
Thanks for pointing that out. We'll make the correction.
 
Q. Hi Roger. Subsequent to your EIA recommendation in 2020 to purchase OXY (which I did!), these warrants were issued to shareholders. Please advise and explain any recommendation. Thanks always Roger!--Barry J.
 
A. Hi Barry
 
These are warrants that allow you to buy Occidental common shares at a price of $22 per share, until August 3, 2027 when they'll expire.
. The warrants' intrinsic value at any time will be the current price of OXY less $22 per share, though the market price has varied, To exercise them--which you can do at any time--you'll need to pay $22 per share.
 
We're still recommending Occidental as a buy at $55 or lower. So exercising these warrants is a good way to buy a position at a discount. Two things we would not advise: Selling the warrants on the open market if the price is than $23--OXY is currently trading a little over $45, so the warrants' intrinsic value is roughly $23. The other is waiting past 8/3/27 to exercise them when they expire. If you don't want to own that much OXY you can still exercise the warrants and then sell the extra OXY for a substantial gain.
 
 
Q/ The March 2025 Utility Report Card that I downloaded the other day recommends selling any shares in Allete  (NYSE: ALE) if the price is higher than 65.50. When the company goes private sometime this year it will payout 67. I can't find any explanation for this discrepancy in
1:53
any of the articles I looked at. Am I missing something somewhere? Thank for any help and regards.—Jim M.
 
A. Hi Jim.
 
Yes if the acquisition closes, Allete shares will be swapped for $67 per share in cash. But if regulators in Minnesota wind up rejecting the deal, the stock would likely drop back into the 50s.
 
At this time, it still looks like this deal will go through. But the risk it won’t appears to be rising. And at a price above $65.50, your additional gain for holding on and taking that risk is a little over 2%. 
 
This is basically risk reduction advice. You’ll make more money selling now and investing in a money market fund.
 
Q. I have owned Energy Transfer LP (NYSE: ET) and Enterprise Products Partners (NYSE: EPD) for many years and plan to continue.
I listened to a podcast with Adam Rozencwajg and his opinion is that shale production has more than peaked in all but the Permian Basin and it is close to peaking also. Do you agree? If so should I think of shorter term holdings of these stocks especially with the future increases in export capability—Lee O.
 
Hi Lee
 
People have been forecasting shale production peaks for many years now. But I would argue whether it has is not really relevant for shale producers or midstream companies in the age of shale discipline--where companies only spend when realized selling prices will generate substantial free cash flow to return to shareholders. 
 
Ownership of shale basins like the Permian has consolidated and is now largely controlled by a handful of giants who will not boost spending just for the sake of lifting output, as was the case in the previous decade. Rather, reserves are being managed for profitability, which means players will enjoy massive free cash flow long after actual output has peaked. 
 
 
 
As for midstream companies, almost everything they build now is under long-term contract to that handful of very strong producers--or else to end users like utilities. And the contracts are typically take or pay (capacity) based, so volatility of volumes when producers cut back doesn't impact cash flow either. 
 
How much oil and gas will US shale producers export through midstream companies? The future is promising, especially with natural gas demand rising globally as a necessary support for renewable energy and as coal fired electricity is phased out in many countries. But there's certainly no guarantee either, with major importers like China looking for ways to increase their energy independence. 
 
The conservatism of the shale patch companies gives us a lot of confidence that the big gains of this energy cycle are yet ahead for both producers and midstream companies. Mainly, there's no build it and they will come mentality as there was at the last peak in 2014-15. But at some point, there will be a
1:54
peak to the cycle and we'll want to take our profits and hole up in the biggest as strongest companies--as Energy and Income did in the previous decade. But for now, we see a lot more upside.
 
 
Q. This email is for the mailbag-Under this anything goes administration and the back and forth of tariff "policy", do you think that there is any chance that tariffs could be imposed upon power producers (such as LEU, NRG, CEG, NRG) and even more braindead, the actual Electrical, Nuke and Natgas utes themselves? I would think not as 1.) these cos. are already onshored and 2.) I don't believe that the producers and the utes contribute to any trade imbalance. However, I'm a bit concerned that with the premier of Ontario, Canada uttering about cutting power supplies to 3 US states from its nuke plant based in Ontario-that this threat could be the first step toward "weaponizing" power in an ongoing trade war.  
 
The price of crude oil seems to be dropping like a rock-$66-67 on March 6-any comment on factors that may be
causing this drop? I thought that the price of crude might stay steady with the new admin. touting support for fossil fuels, but the exact opposite has occurred. I'm happy at the gas pump but my upstream/midstream/downstream holdings are taking the gas pipe. –James G.
 
 
A. Hi James
 
The drop in crude oil appears related to concerns the economy may be slowing down. That's not all related to tariffs. But the concern is that these new taxes and other emerging barriers to trade will be just one more factor to kick us over, the big one being higher for longer borrowing rates that are still restraining investment in all but a handful of sectors. That's more or less the same reason the overall stock market--especially Big Tech--has been coming down. 
 
Regarding energy, though, I would point out two things. First, natural gas prices have been and remain quite strong. That's basically tight supply--still constrained by shale discipline--and growing underlying demand, especially from power generation and LNG export
And these are very long-term trends likely to stay in motion for a while, regardless of policy. Second, crude oil is rallying today, even with the stock market sliding again. That's also a pretty good sign production discipline in shale and around the world will respond by cutting supply even if the global economy weakens further. And it's very bullish long term.
 
Bottom line on these tariffs: Investors large and small always overestimate the impact of politics on industries, and especially their impact on investment returns. The narrative since the election has been drill baby drill will lead to overproduction and crashing prices. We're not seeing it now and we don't think we ever will. Disruption? Sure, if they're implemented--which is not a given at this point. But energy has to flow. And who bears the cost will depend on supply and demand--refiners if the economy slides into recession and consumers and businesses if it doesn't. And The Trump Administration is ruling out Venezuelan oil, so the heavy oil
1:55
will have to come from Canada.
 
The same thing goes with any electricity crossing the border--it's being used so someone is going to have to pay the government tariff/tax, whether it's from Canada or the US. But in the case of power, we're in shortage in this country. So the cost will be paid by businesses and consumers. As for withholding electricity to the US, that will drive up prices for sure. But it will also hurt Canadian producers to miss the sales.
 
A lot of crazy things can happen when politics invades energy. Politicians will boast about how tough they're being. And consumers and businesses pay more. But ironically, the energy companies are in pretty good shape here to avoid damage. And that's because demand growth is strong, while supplies are increasingly strained. So I would not see any of the companies you list as being at serious risk.
 
 
Q. Hi Roger.

Any thoughts why ET is down almost 14% in the last month.? As always, greatly appreciate your insight Best—Ron K.
 
A. Hi Ron
Energy Transfer LP had a very solid Q4 result and set solid guidance for 2025 EBITDA and free cash flow--fueled by strong contracting activity and conservative asset expansion. It's also been reliably raising dividends every quarter within the guidance of 3-5% a year of the past several years. The company is in good shape to capture additional energy transportation business serving re-shoring business especially in Texas, as well as to data centers in the region with the Cloudburst deal likely to be the first of many.
 
In short, it's in very good shape going forward and I'm comfortable with our current advice of buying at 20 or lower. 
 
Shares have dropped along with other large midstream companies since early February. And that move has been in tandem with the drop in oil prices, which in turn have weakened on worries about an economic slowdown/recession ahead--the same catalyst that's been dragging down the overall stock market. I would point out that natural gas prices have remained strong, which is much
more important to ET's business. Also, oil is rallying today even with the stock market sliding again, which is a good sign shale discipline is intact. But ET is a big cap midstream company that's in a lot of ETFs. So the same buying momentum that briefly pushed shares over $21 has become selling momentum.
 
Should we hit a slowdown for the economy, ET is well positioned to handle it as a business--anchored by long-term contracts in a business where midstream infrastructure is in increasingly tight supply, and self-funding CAPEX plus dividends with operating cash flow. I can't rule out shares coming down further. But any dip from this point--where shares yield 7.5% with a very safe and growing dividend--would be a buying opportunity for anyone light on ET.
1:57
That's it for pre-chat questions. If for some reason yours was missed, please ask it in the chat. Now let's get to the live ones.
Tommy
2:05
Hi Roger,  What is your current perspective on XIFR now that dividend has been stopped, and it has taken a significant hit to the price?
AvatarRoger Conrad
2:05
appears likely in my view if they can stick to plan. But this one is for very patient investors only.
Bill G
2:10
Hello Roger and Elliott: Saw a buy idea today on PROP. Any thoughts on this low priced issue?
Thanks and appreciate that you have this Chat every month.
AvatarElliott Gue
2:10
The DJ Basin is a well-known play and PROP just made a significant new acquisition there. However, they're spending a lot of capital -- midpoint of guidance is 125 million for 2025 -- to produce a small amount of oil and gas (7500 boe/day). They also just did a share issue to fund their acquisition. I'd rather stick to higher quality names here. This is more the story of speculative name that might work for shorter-term holders when crude is higher than today.
John A
2:10
Dear Conrad,

Do you harbor opinions about this upcoming public offering? What is your opinion of this REIT and do you have an inclination as to its FMV and quality of its holdings?

Thank you,
AvatarRoger Conrad
2:10
Hi John. Your question didn't include the name of the company you're asking about. We'll be on this for a while, so please do resubmit.

As a general rule, the stock market has been fairly hostile to equity issuance from REITs, really stretching back to when the Fed started raising rates in early 2022. But if the announcement has already been made, a dip in price is often a buying opportunity--provided we like the underlying business.

By the way, The REIT Sheet March issue went out late this morning--including the full coverage universe table of 83 REITs with comments including earnings and guidance analysis. And I'm here to answer any questions readers have.

Anyone not acquainted with the REIT Sheet and is interested in the sector--your timing is good I think--check in with Sherry 9-5 pm ET weekdays at 1-877-302-0749.
Dwayne E.
2:16
Nextera Energy Partners seems to have found the bottom of its range. Where do you think it goes from here? Upside potential?

Thanks
AvatarRoger Conrad
2:16
Hi Dwayne. As I answered a couple questions ago, I think NextEra Energy Partners--now XPLR Infrastructure and trading under the XIFR symbol--has potential to triple from here, provided it successfully executes the debt reduction plan laid out by management in January. The plan does not rely on issuing new debt or equity. But it does depend on the assets continuing to generate free cash flow in line with guidance--which will be impacted to some extent by wind and sun conditions and facility availability. I think we'll get a good update on progress in late April, when XPLR announces Q1 results and guidance.

It does look like the stock has bottomed since early February. And at just 30% of book value, it's very cheap. But I think investors who hold on or buy for recovery are going to have to be prepared to be very patient--and that will be difficult for some due to the lack of dividend.
James G
2:23
BUI is highlighted in the first issue of CUI+Plus. It has an admittedly high distib of around 7.5% ($1.512 from April 2024-March 2025) and the distrib is paid out under a "Managed Distribution" policy. However, if we peel the onion, we see that over the same period of time, the distribution is comprised of $.44 ROC, Long Gain of $.53 and a Short Gain of $.28. This CEF also cut its distrib in November, 2024. My point is that on a "going concern" basis, only about 17% of the distribution is comprised of Current Income. Thus, if the cap gains don't flow, the distribution is in trouble. And, I have always avoided funds with ROC as ROC means I am receiving my own investment back, whereas I would much rather see no ROC return (admittedly untaxed) at all.
Have I gone off the rails here??
This missive is for the mailbag-if not today, then for a later date. By the way, kudos on CUI+Plus-never knew this port existed-and it is a superior trove of data for a statistical nutcase like me.
AvatarRoger Conrad
2:23
Hi James. We may be talking about different closed end funds. BlackRock Utilities, Infrastructure and Power (BUI) actually increased its monthly distribution to 13.6 cents from 12.1 cents in late November.

Regarding closed end funds, I sat on the board of Miller Howard High Income Equity for 10 years--12 really including the organization period. It's unfortunately been wound up per the terms of its initial offering. But I did learn a few things about CEFs--mainly what's considered "return of capital" is not always really a return of investors' money invested. This would in fact be reflected as a reduction of net asset value. Rather, it's a classification that confers a tax advantage on the owner of units, period. Same thing as with capital gains funds take as part of the course of managing portfolios.

Anyway, BUI did surprise me with the distribution increase. But they have never cut since inception. And the change last November was a boost of 12.4%.
AvatarRoger Conrad
2:27
CEFs do raise cash from dividends by a variety of means. And you're right to look under the hood. MHI had its own internal number in fact that we the board believed made sense for shareholders. But the larger point is these are funds managing assets--as you manage your own portfolio. The distributions are at discretion of management. And they do occasionally cut dividends--many funds heavy on leverage, for example, were forced to sell stocks to pay down loans during the early 2020 selloff. But the larger point here is accounting for what makes a safe dividend is different. And BUI so far has a great record--it also does not employ meaningful leverage.
Thanks so much for that question.
Frank
2:28
There seems to be a lot of talk about natural gas demand (EQT and EXE)Do you and Elliott have a favorite small-cap natural gas play that would really be leveraged to demand for natural gas.
AvatarElliott Gue
2:28
Due to industry consolidation over the last few years, the shale E&Ps with exposure to our favorite gas basins -- Marcellus and Haynesville -- are mainly large cap names. Of the smaller names that I do follow on a regular basis I just don't like the names for various reasons. For example, CNX is a smaller Marcellus player, but they've really loaded up on the hedges, leaving them with little or no upside exposure to natgas. CRK is an interesting play in the Haynesville and the stock is basically a short squeeze play controlled by Jerry Jones. But, fundamentally, CRK's costs are too high and they're unlikely to generate much free cash flow as they seek to prove out their Texas Haynesville acreage. Our preference is to still with the larger names like EXE and EQT to play the year of gas theme -- they still have plenty of leverage to the gas theme.
Tim W.
2:34
Roger,

I noticed on the Vistra annual report that the board members are getting $300,000 to $500,000 in stock given to them each year.

I thought that seemed excessive; thoughts?

I'm sure glad you recommended taking profits on Vistra before it sank. I sold 70% of my vistra investment and moved that money to dream price stocks before Vistra headed lower. ;-) 

So appreciate you and appreciate all you have done for my family.
AvatarRoger Conrad
2:34
Hi Tim. I'm really happy that you were able to use the profit taking advice on Vistra Corp to lock in most of that gain we saw on the crazy upside momentum earlier this year. The action late last year and early this year for Vistra, Constellation and other nuclear companies really does resemble the green energy bubble that heated up around the 2020 election, and has gone bust since.

I do think Vistra and Constellation are the class of US nuclear--along with a few utility players that also own contracted nuclear plants like Dominion Energy and NextEra Energy. D and NEE are buys now and VST and CEG are coming closer.

But the real lesson here I think is with so much passive money and so few real decision makers, momentum in the stock market can get pretty crazy. And even we long-term minded income oriented investors need to take advantage of it by occasionally selling pieces of stocks we like--which why we now have taking profits prices for every stock we track in CUI, EIA, REIT Sheet, CUI Plus, etc.
AvatarRoger Conrad
2:36
The stock award for Vistra board members does look a little high. And they're likely to hear from shareholders about it given what's happened to the stock since late January. I don't think it's a disqualifier for owning the company necessarily at this time. But our Board never took a raise in 10 years.
Sandy
2:44
Hi Roger,

We have our taxes done. Our CPA is pleased with the results of your portfolio. Thank you for my peace of mind in this political climate.

I've held MACSX since 2005. It's now MEGMX. It's down about 6%. Is this something to hang onto or is there a better alternative?

Thanks again,
AvatarRoger Conrad
2:44
Hi Sandy. That's very nice to hear! Thank you!

Emerging markets have been all over the place since the Fed started raising interest rates in early 2022. But while this fund is down from its peak last October, it is impressive that management has been able to keep net asset value generally growing over that time. On March 24, 2022, for example, NAV was $12.25--it's now about $13.50. That's not much compared to Big Tech. But it shows management has been solid about its choices of stocks as well as timing decisions. And the 12-month total return is close to 12%, which is actually better than the S&P 500.

Obviously, this fund is going to do a lot better when emerging markets rally. And while there's value now, there's also great uncertainty--from the US dollar's strength to China's economic weakness and US government trade policy. But I think they'll rally again. And while my preference is always individual utilities like the recommendations in the February issue of CUI--this is an historically solid fund.
Dan N.
2:52
Good morning Roger-

What’s your take on the recent financing by XIFR? The interest rate on $1.4B looked high, but the market reaction seemed positive. Is this all about having a transparent margin of safety to meet near term financing? Should we be more confident in a recovery?

Morningstar analysts make repeated comments that renewable energy now has ‘fierce competition and compressed returns,’ arguing that only NextEra warrants a competitive moat. Do you think that filter is too strict, that other companies have the needed scale? I also wonder, given recent policy uncertainties, whether BEP and AES might now be considered to have a business advantage for their international scope? Until recently, a US market focus carried a premium, but my instincts say it’s probably good to have some flexibility to invest across markets. Thoughts?

I started buying EIX around 50, and there’s been a modest rebound since those lows. There have also been additional wildfire lawsuits filed. Do the # of lawsuits matter? Is
AvatarRoger Conrad
2:52
Hi Dan. I think the terms of XPLR's financing are actually pretty reasonable, given the state of the bond market and the sub-investment grade credit rating (BB from S&P, BB+ from Fitch). In fact, this could be viewed as a positive development--higher interest expense was expected to refinance CEPFs (which essentially had 0% interest) and the recovery plan was constructed in such a way that the company would be able to not issue new debt. That could mean a faster than expected recovery and resumption of dividends and stock buybacks. But before I get too excited, I want to see a lot of confirmation in XPLR's Q1 numbers and guidance. I'm planning to be very patient holding this stock.

I'm not sure where Morningstar gets that information. The environment has been difficult for smaller renewable energy developers for a while, mainly because of capital costs. But the bigger developers report massive demand growth and the ability to pass on higher costs in long-term contracts.
AvatarRoger Conrad
2:55
Continuing on Dan's question, pretty much everything anyone is building now is pre-contracted with costs also locked in--so developers like AES and Brookfield can go to investors and show pretty much locked in returns before they turn a spadeful of earth. And as these companies said in Q4 earnings calls, their projects are almost all on private land, so not even unprecedented federal rejection of previously granted permits is an issue. The key is electricity demand is going up in real time at the fastest rate since the 1960s. And so long as that
is the case, producers will have pricing power when it comes to contracts.
2:58
Regarding Edison, the litigation for damages is going to hang over the stock until we see a ruling form Cal Fire and others regarding to what extent the utility's equipment was responsible for the Eaton Fire--a deactivated line may have re-energized and been an ignition point. This has not been proven. And the longer it is not, I think the less likely it will be.
3:00
If it is, the next step is to determine if Edison was negligent. If it's not, the California Wildfire Insurance Fund will cover its full liability--and the state appears committed to increasing funding. The worst case is EIX is found negligent. But even then, the total liability would be about $4 bil--which is easily reflected in the drop in the stock this year.
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