JotCast | 8/23/21 Conrad's Utility Investor Live Chat

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8/23/21 Conrad's Utility Investor Live Chat

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Roger Conrad

7:13

Hello.

Charlie S

7:16

Roger, do you have any comments or thoughts about Dow Chemical (DOW)? Thanks again, Charlie

Roger Conrad

7:16

Hi Charlie. It's definitely one we always look at for CUI Plus, our portfolio holding stocks across a wide range of industries. It's definitely cheap now at 8.4 times expected next 12 months earnings and the yield--though frozen over the past year--is generous at 4.5%. I don't have a recommendation for you at this time. But it does look like a company that will benefit from a lift in infrastructure spending and again we'll be taking a hard look at it.

Neil V.

7:38

Roger,
Do you have an info source for smaller scale clean coal or nuclear facilities? (i.e. whether these can economically compete with natural gas, solar, wind, etc. in any state or country)

It seems that states and utility regulators would have wised up by now as to the risk of new development for large scale plants, at least so as to not be surprised at overruns and delays. My state Indiana has had its share of overruns; i.e. Marble Hill and Edwardsport. It looks to me that California and Illinois regulators and state governments have effectively decided that any nuclear activity in their states is over.

Notwithstanding the Kemper episode, I hold Southern company and expect to continue for the long term.

- Neil

Roger Conrad

7:38

Hi Neil. I think the Southern Company example shows how a large company can absorb the financial blow from a project that goes sour. This was definitely the case at Kemper in Mississippi as the carbon capture process simply didn't work. It's also been the case at the Vogtle nuclear construction project in Georgia, which has gone well over budget even though it looks like it will eventually work. In Southern's defense, both Kemper and Vogtle are first mover projects in the US, so there were added risks. But the main takeaway is Southern was able to stay on track despite the setbacks, which a smaller company would not necessarily have. That's one reason I'm comfortable with the position as well, though the stock is now slightly above my highest recommended entry point of 65.

To your larger point on states and utility regulators, I think they are used to delays and overruns and definitely prefer the smaller scale, faster to complete projects companies are focused on now. Even the offshore wind facilities being

Roger Conrad

7:39

built by Dominion, Avangrid, EverSource (NYSE: ES) and others have relatively prescribed timelines for completion and can lock down materials and labor costs.

7:40

I think the best source for energy data is still the Department of Energy's Energy Information Administration. They have quite a bit of forecasting that sometimes amounts to opinion and is rarely if ever particularly accurate. But the numerical data is very good and it's free to access.

We also have access to Bloomberg New Energy Finance at CUI and EIA, though that is quite an expensive service.

arthur

7:45

Hi Roger, Please comment on PPL, Any reason for the stock not making much of a move after the sale of it's British assets? How does it look going forward? CNP-B any reason not to keep holding it? Thoughts on AY and AQN, do prefer one over other? Lastly, and a bit off topic, any reason to worry about MPW, it has been trending down lately and I am not sure why. Thanks!

Roger Conrad

7:45

Hi Arthur. As I said answering an earlier question, I think the stock has failed to respond to a great deal of good news--including the successful sale of the UK assets, debt reduction, progress on the acquisition of Rhode Island utility Narragansett and a favorable rate case decision in Kentucky--because management hasn't to date issued a firm figure for its "reset" dividend next year. Once it gives us something firm, investors will be able assign value to the stock and I think we'll see some gains.

No reason not to hold Centerpoint preferred through the conversion into common stock in about a week in my opinion. And as I've said during the chat, I see multiple catalysts for share price gains as soon as the next 12-18 months.

I would prefer Algonquin for conservative investors because it also operates utility assets and has more scale, Atlantica for aggressive investors as it's more leveraged to renewable energy.

Finally, as I said earlier in the chat about Medical Properties Trust, I think

Roger Conrad

7:46

it's been discounted by investors because of heavy reliance on a single tenant and concerns about access to low cost capital to fund acquisitions. I think Q2 results and guidance answered both concerns well and the REIT will continue to going forward. But in the meantime, the dividend is solid and well above the average REIT's.

salvatore

7:49

Evening Roger Thanks for all your ongoing support ,keeping us grounded during ups and downs of the market. Have you any change of thought on tds or aqn .

Roger Conrad

7:49

Thanks Salvatore. I appreciate the kind words. My view on Telephone and Data Systems as well as Algonquin Power & Utilities remains very positive. I think TDS answered any questions about its sustainability in Q2 results and I believe it will make us money whether it stays independent or is bought out, as I think is most likely. Algonquin also had great earnings and is on track with growth plans, a strong buy up to 16.

Guest

7:50

Thoughts on PPL?

Roger Conrad

7:50

Not really beyond what I've said already in this chat or in the August issue. I think the shares will be in a much better place once management clarifies the dividend. Until then, the stock is cheap.

Howard F

7:54

would you take profits or sell bph now and what about shen

Roger Conrad

7:54

Hi Howard. I believe I answered your question on BHP and Shenandoah Telecom earlier in the chat. If you want more on them, please drop us a line at service@capitalisttimes.com.

jeff b

7:55

What price would you sell CNP/B at. Sorry if you already answered.

Roger Conrad

7:55

Hi Jeff. I have been advising a sale if the preferred moved over $50 before conversion on September 1 into Centerpoint common stock. That now seems unlikely but it would be my advice it that did happen. Otherwise, my advice is just to take the common shares.

Alex M.

8:02

Hey Roger. What are your thoughts on BP's buyout of BPMP? I've heard mixed reviews on the transaction. Thanks.

Roger Conrad

8:02

It's certainly no surprise. In fact, we've been talking about a likely BP buyout of BP Midstream Partners in Energy and Income Advisor for some time. It's been pretty clear for a while that the parent lost interest in spinning down assets to the partnership. That made sense because of BPMP's high cost of equity capital yielding more than 10%. But it also created a vicious cycle, with investors avoiding BPMP because of its inability to grow. I think it's likely BP will have to bump up its all-stock offer from $13.01 per unit to win approval. But as it already owns 54.35% of the common units as well as the general partner interest, BPMP unitholders have little choice than to eventually agree to a deal. I think BPMP rates a hold as there is likely to be at least one more dividend and getting BP common at this point in the energy cycle means there's upside.

We'll have more discussion of takeover targets in a similar place to BPMP in the upcoming issue of Energy and Income Advisor.

Charlie S

8:03

Hi Roger! I think my 2 questions may have been lost in the queue. I hate toi keep you yet longer than the many hours you have already put in for all of our benefits, but do you have a opinion on FAX, the closed end bond fund you covered long ago and Dow Chemical (DOW). Thanks as always for your sage advice, patience (and endurance!) Charlie

Roger Conrad

8:03

Hi Charlie. I did answer them, it just took me a while. Thanks again for bringing up those names--both are definitely potential names for the CUI Plus Portfolio at some point.

Guest

8:05

Thoughts on MMP?

Mr G

Roger Conrad

8:05

I do cover that midstream in CUI. I think it's a very high quality outfit with a conservative financial and operating strategy and well placed assets that make it a takeover target. As my Utility Report Card comments in the August issue highlight, Q2 results were solid and show it's adapted to the current environment well. I think it's a very strong buy at these levels.

Guest

8:06

Any thoughts on RTLR?

Roger Conrad

8:06

I like it. It's in the Energy and Income Advisor coverage universe under MLPs and Midstream, though it's a producer paying a variable dividend under the wing of general partner Diamondback Energy (NSDQ: FANG). Join us on August 31 for the EIA live chat for more.

Guest

8:07

Mr G

Roger Conrad

8:07

Thanks for joining us today Mr G.

Lou G.

8:15

Joining the chat very late but see you are still going strong! If you have addressed PCG I will review the transcript, but do you see any runway for them to reverse the seemingly endless slide down? You have preached patience on this one--is it still the case? Thanks for your tireless efforts on behalf of your subscribers!

Roger Conrad

8:15

Hi Lou. Thanks for joining us today and for your kind words. I actually have not addressed the PG&E (NYSE: PCG) situation today so I very much appreciate the question. My view of the risk here is how much more scrutiny from regulators, the courts and potentially the state of California as a result of the utility's possible role starting the Dixie Fire. It seems pretty obvious to me that a majority of the players want the company to succeed in hardening its network, rather than provoke a state takeover that could create a massive financial boondoggle and a lot of time in the courts. But given the state's unsettled politics, anything is possible and that's why the stock is trading for less than $10 at this time. I do think anything short of a state takeover means at least a double in the shares over the next 12-18 months as the utility under its current strong leadership turns things around. But until we're through this year's fire season and there's more clarity on the Dixie fire fallout, I would not expect

Roger Conrad

8:15

PG&E to break out of its current range. I still think it's a worthy speculation. But it's also only for the risk tolerant and the patient.

Paul

8:16

Thank you Roger. I really appreciate all your help!

Roger Conrad

8:16

Thank you Paul. It's my pleasure.

Roger Conrad

8:17

Well that's all we have in the queue for today, so I'm going to sign off. Thanks again everyone for participating and for being a member of our Conrad's Utility Investor community. We really do appreciate your business and look forward to many more years of profitable returns.

8:18

As a reminder, we will be sending you a link to the complete Q&A transcript, probably sometime tomorrow morning--at which time it will also be published on the CUI website. Thanks again everyone and let's have a great week!

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