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5/25/22 Capitalist Times Live Chat
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Willy
5:00
Roger, In my previous message I intended to get your opinion on the relative merits of ET vs. PAGP. In my message, I neglected to include their symbols beyond the subject line. Sorry for the confusion. I already have positions in KMI, EDP, MMP and MPLX . You seem to like both ET and PAGP for possible appreciation, but is one a safer bet than the other?
AvatarRoger Conrad
5:00
No problem. Thanks for sending it again. I think Energy Transfer gives you more diversification and a faster path to a much higher dividend. Plains may have more long-run upside. But we're not going to see a real recovery for either the stock price or the dividend until there's a real volumes recovery--and not just in the Permian, which is more than 70% of its current volumes. More oil production means a higher price for Plains, otherwise we have to be patient.
Jimmy
5:04
Diamondback Energy seems under priced when compared to its peers.  Can you point to a reason this stock seems depressed (although it has seen considerable share price growth this year?).  Even the generous special dividend did not seem to give it much of a pop.
AvatarRoger Conrad
5:04
Well, they just declared a dividend of $3.05 per share for payment last Monday, which is cash in the bank for we shareholders. But Diamondback has also returned 94% over the past 12 months and about 35% year to date, so the stock isn't underwhelming by much. I don't think the percentage yield is a good value gauge BTW because it's based on a variable payout. In any case, this is a company with very low cost, well situated oil-weighted reserves. We don't see it as particularly cheap, however, and rate it a buy on a dip to 110 or lower. Its tracked in our E&P and Services coverage universe table on the EIA website.
Jeff
5:06
I own CIVI it has shot up like a rocket.  Generally I don't like that kind of move.  Where do you see them in the next 12 months?
AvatarRoger Conrad
5:06
It's followed the same path as other producers higher and we like the variable dividend as a way to return cash to shareholders. It's a good company but is likely to follow energy prices and we'd be careful at the current price.
JT
5:07
Hi Roger. Are you familiar with Pennant Park Floating Rate Capital,PFLT? If so,any thoughts?
AvatarRoger Conrad
5:07
Hi JT. It's not one were currently covering. My first impression is the yield is that high because this company has a lot of moving parts and could be hurt by the rising rate environment as well as the potential for a softer economy. I think there are better high yield bets.
Victor
5:10
When we say prices higher for longer. Are we including a recession as part of the equation?
AvatarRoger Conrad
5:10
Yes. We do believe a recession would bring prices down in the near term but if anything it would exacerbate the investment deficit in the industry that's holding supply well back of demand growth. And that would mean even higher prices down the road than we're seeing now. As we've said, we have issued advice in our model portfolio for lightening up on higher priced stocks that we think have the most to lose from a recession induced drop in prices.
Victor
5:10
What is your opinion on FANG?
AvatarRoger Conrad
5:10
Hi Victor. I don't really have anything to add to what I answered to the last question on FANG. Great company but looks pricey now.
James
5:11
Hi Elliott, if you had a 401K invested in broad US stock funds and still have 20+ years before retirement, is your investment philosophy to sell or reduce stock exposure as we enter a bear market and buy back in later or are you in the camp of buy and hold (not try to time this market)?
AvatarElliott Gue
5:11
Generally my view is that we're entering a period more like 1968 to 1982 or 1999 to 2009. Both were long periods where real returns from the stock market were negative. The 1968 to 1982 example, bonds also generated negative real returns. Now on a 20+ year holding period, I don't think there's ever been an example in US financial history where returns have been negative outright. Might not be a great return after inflation and it might not be comfortable (wild rallies and nasty bear markets) but still positive. My view is that in a market like 1968 to 1982 or 1999 to 2009, an investor can beat a simple buy and hold strategy on the S&P 500 through some market timing as well as diversification into other asset classes (real assets as an example) and "picking your spots" such as avoiding growth in the current market and focusing on vale/dividends/energy and then increasing allocations to equities as valuations come down.
Guest
5:19
What's your opinion of PAGP. Buy more? Hold?
AvatarRoger Conrad
5:19
We rate the shares a buy up to $26.50 for more aggressive investors. As I answered in a question previously, the company has adjusted to the current low volumes environment and the dividend is on the rise. But we won't see a real share recovery for either PAGP or Plains All American (NYSE: PAA) until North American volumes pick up. We're confident that will happen but it may be a few months off.
Willy
5:20
Roger, my earlier question concerned your opinion on the relative merits of ET vs. PAGP. I know you like them both, but for an income investor with appreciation possibilities in mind, how would you game it? Thanks again for your guidance.
AvatarRoger Conrad
5:20
Hi Willy. If you're going to push me on it, I'm more comfortable as an income investor right now with Energy Transfer LP than Plains--dividend recovery looks like it's going to be faster. But both are Model Portfolio recommendations.
BonnieBeth
5:26
Hi Roger,
 
I am long time CUI and REIT subscriber.
 
I just purchased a small number of shares of SLG.  I purchased this REIT on 2/23/2022.
 
I am slightly down in SLG and notice you have a sell advisory on it in the current issue of the REIT report.
 
I have a small loss.  Should I still sell and take the loss?
 
I am uncertain what to do.
AvatarRoger Conrad
5:26
It's up a little today. As I indicated in the REIT Sheet update, I basically didn't like what I saw in the Q1 results and guidance regards business momentum and it seems highly uncertain if New York City office space will ever be what it once was. That's the reason I took it off the REIT Sheet recommendations list. And I do think the other REITs on the list present far less risk and more upside at this time.
AvatarRoger Conrad
5:27
Well. That looks like all we have today in the queue as well as from the emails we received prior to the chat. If for any reason you feel your questions weren't fully answered, please feel free to write us at service@capitalisttimes.com and we will get back to you as soon as we can. We do very much appreciate your business and will look forward to chatting with you next month. Have a great evening and Happy Memorial Day weekend.
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