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8/26/25 Capitalist Times Live Chat

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Frank

2:53

I get a lot of information from reading a companies quarterly earnings call transcripts but am having a hard time finding them. Seeking Alpha has a lot but that's a pay website. Is there anywhere free an investor can access these quarterly calls?

Elliott Gue

2:53

I don't know of any free sites. I often use Seeking Alpha for this as well. Some of the companies I follow do post the Q&A transcripts to their websites, but I'd say it's less than 1/5th of them. I am also a little "old school" about the whole thing, so sometimes I like to listen to the call in real time, streamed on the company's website. Sometimes listening to the tone of analysts/management on the call can be useful.

John P.

2:59

If you are retired and rely on your income stream in the money market, what is your opinion on how to make up the difference in lost income when the Fed lowers interest rates for example 1%? Is there a certain percentage to allocate between high income stocks and bonds, or is there another strategy that works with lower risk? Thank you for your help.

Roger Conrad

2:59

Hi John. I think a mix is a great idea--provided you resolve not to just set and forget. That includes bonds. And before taking a plunge there, I would definitely check out Elliott's "Smart Bonds"--he has an abbreviated free version on Substack. You can also call Sherry at 877-302-0749 to find out more.

Regarding an equity income strategy, I invite you to check out CUI Plus/CT Income. And I also feature a weekly free version on Substack "Dividends with Roger Conrad."

I would say the Vanguard Federal Money Market Fund's yield has actually risen lately and is now nearly 4.5%. That's even with White House pressure on the Fed to cut rates. And I think it's really instructive--the market sets interest rates. The Fed influences. But if people think it's being forced to cut, you're going to see more bets on inflation and you're going to be happy you had some of the money fund.

Don L.

3:06

Roger, Everyone owning utility stocks are wishing for lower interest rates. However when the Fed lowers rates doesn't it signify the economy is slowing?

Roger Conrad

3:06

Hi Don. I think utilities would be in very good position if the Fed is perceived as cutting rates because the economy is slowing. That's because the investment plans now in place are fueled by Big Tech demand for electricity to power AI--which at this point does not appear vulnerable to slowing growth. And lower borrowing costs for any reason would make it cheaper to build.

If on the other hand, the Fed by cutting rates were seen as bowing to political pressure and abandoning the fight against inflation, utility borrowing costs would likely rise--increasing the cost of projects.

I'm still cautiously optimistic the Fed will follow through on the two quarter point Fed Funds rate cuts for 2025 that it guided to last December. But in the meantime, my strongest advice is not to pay more than my highest recommended entry points for any utility stock--fortunately there are still many to choose from.

janet

3:07

The majors have been underperforming lately. What do you see as near term price targets for XOM and CVX?

Elliott Gue

3:07

XOM and CVX have been underperforming the S&P 500 this year though they've performed in line with, or slightly better than, the broader S&P 500 Energy Index. (CVX and XOM make up something like 40% of that index). Both stocks have been in a trading range for a while now, which basically mirrors the trading range in oil. For XOM, the top of that range is around $120/$125 and for CVX it's $165/$170. Over the intermediate to long term, we see sustainable oil prices around $80 to $90/bbl and at a flat $85/bbl price deck we believe XOM can trade upwards of $170 and CVX over $200. As we've outlined in recent issues, the oil market has some near-term headwinds amid worries about excess supply but we see limited downside risk from the current quote. Into 2026 we believe the oil market will look tighter than the market expects and that's likely the upside catalyst for these stocks.

Tommy

3:13

With a pending interest rate cut, what is the implication for REITS, and is there one that you would recommend once the Fed drops rates. Thanks for doing these monthly chats. Much appreciated

Roger Conrad

3:13

Hi Tommy. The situation for most REITs is a little more fraught than it is for utilities. Mainly, there's nothing equivalent to the boost in electricity demand from AI enabled data centers owned by Big Tech. And if you've been reading my REIT Sheet, you know REITs have responded to higher borrowing costs by cutting back on development across property types.

My view is this is extremely bullish for REITs across property types over the next few years. Mainly, demand is starting to outpace supply. And barring a real recession, that's going to mean higher occupancy, rents and ultimately development opportunities.

I think a rate cut from the Fed that's not perceived as firing up inflation will bring down borrowing costs. That will be very bullish for the REITs I recommend going forward--if for no other reason than it will reduce the cost of refinancing. A Fed cut perceived as bowing to political pressure and igniting inflation will have the opposite impact. But I think the REITs we own are positioned for that.

Larry W.

3:18

Hello gentlemen. I always look forward to your monthly insights. MDU Resources seems to be stuck around the level I bought it. Is it worth keeping, or investing the money in something more favorable? Thanks.

Roger Conrad

3:18

Hi Larry. MDU Resources has basically transformed over the past couple years from a utility attached to a construction company into a pure utility. The two spinoffs were a massive windfall but I think the remaining MDU is probably still trying to find its level.

I think the dramatic boost in the dividend growth rate--they declared a 7.7% boost earlier this month--is very bullish and a sign of things to come. And that rate of growth will be sustainable if the company can stick to target 6-8% annual earnings growth--which investment plans back.

I think MDU is very likely headed for a high premium takeover. But I think it's a good stock to keep even if it stays independent.

Frank F.

3:29

I am looking to add two stocks to my portfolio. K-1's are not a problem. Out of EXE; PR; VG; or PAA which do you think are the most compelling value right now.? Or add any others that you feel good about.

Roger Conrad

3:29

I think you're to some extent comparing apples and oranges. PAA/PAGP is very compelling for high and growing yield now--8% with another big boost likely in October. I think the sale of the Canada NGL assets is a big plus and catalyst for more acquisitions in Texas.

Venture Global looks really cheap right now, particularly in light of their ability to get projects up fast--very important given how volatile energy politics have become in the US. Permian Resources just drilled 5 of 10 new wells at the fastest pace in company history. And Expand is driving down costs--actually raised guidance.

We really like them all at these prices.

Jerry

3:34

Re: DOC Roger, do you cover this ? Your thoughts and advice would be appreciated. Thank you for holding these chats. I always get a lot from them.

Roger Conrad

3:34

Hi Jerry. I do cover Healthpeak Properties in the REIT Sheet. Medical buildings have been a problematic property sector. But this REIT's merger last year with Physicians Realty Trust continues to produce synergies that support modest investment and the dividend. The REIT actually raised guidance last month.

I think this sector is still likely in for some pain. Even before the massive cuts to Medicaid, hospital chains have been defaulting. And the triple net lease model has been in trouble. But I'm cautiously optimistic on Healthpeak at these prices.

Look for the full quarterly update of the REIT Sheet coverage universe with commentary next month.

Fred

3:34

I am looking to add two stocks to my portfolio. K-1's are not a problem. Out of EXE; PR; VG; or PAA which do you think are the most compelling value right now.? Or add any others that you feel good about. Thanks

Elliott Gue

3:34

Thanks for the question. We like all those names but it's quite a diverse mix. Of the 4 you mentioned VG is the most speculative and it's more of a growth story than a near-term income story. Basically, they use modular technology to build LNG terminals, which has allowed them to bring these projects to service far faster than traditional construction timetables would allow. They IPO'd earlier this year and the stock has bounced around a lot. What we see is that in the next 5 years VG could be one of the largest owners of LNG export facilities in the US, perhaps bigger than Cheniere. If that view proves correct, VG would likely trade at multiples of the current quote. EXE and PR are both high-quality E&Ps, the former focused on gas and the latter oil. Both have significant income potential. I still believe the "Year of Gas" theme we first rolled out about a year ago has merit and the recent dip in front month gas futures likely offers a second change to buy a name like EXE at a solid valuation.

Elliott Gue

3:35

As we've been writing, I think there are probably more near-term catalysts for natgas than oil. EXE pays a quarterly base dividend ($0.575/qtr., equates to about a 2.5% annual yield) and then special dividends when free cash is higher. For example, in Q2 they're paying an $0.89 special divvy on top of the $0.575. Longer term, with gas prices around $4/MMBtu that gives you a pretty good idea of what the income potential is here. PR is a low cost oil producer with a peer-leading yield of 4.5% (all base dividend). Fewer near-term catalysts than EXE, but a solid long-term holding in our view. PAA (we actually have PAGP in the model portfolio) is the lowest volatility and highest yielding name on your list. A solid midstream play with some exposure to a lot of the growth themes we cover in EIA.

Alex M.

3:37

Hi Roger. To what do you attribute the recent underperformance of AVA compared to other utility companies? Thanks.

Roger Conrad

3:37

This is wildfire season in the western states. And the past few years, utilities like Avista have traded at a discount in the summer months because of perceived risks.

I think the company has reduced that risk somewhat as most of its states have passed legislation that caps utility liability. But Washington state is still sorting this out and until it does AVA will likely reflect the risk. I did think the Q2 results were solid--especially at the utilities where rate lag is definitely shrinking. But I think it's going to take some sort of wildfire deal to restore AVA to a premium price.

Frank

3:40

Blackstone Minerals recently announced a drilling pact with Ellipsis. Will this have an impact, and if so how soon would you expect a lift in the dividend? I also see recent insider purchases by the CEO

Roger Conrad

3:40

It's definitely huge for them--and confirmation that their lands are perceived as valuable given their location near LNG export infrastructure.

I think for the dividend to be increased again--and I very much believe it will be--we're going to have to see some firming of natural gas prices. This is key not just for realized selling prices' impact on Blackstone's royalty income--but also for production decisions for companies like Ellipsis.

Again, I see it as a matter of whether not when. But I think we're going to have to be patient with benchmark gas still under $3 per million BTU.

Jerry

3:41

Re: DOC Roger, do you cover this ? Your thoughts and advice would be appreciated. Thank you for holding these chats. I always get a lot from them.

Roger Conrad

3:41

Hey Jerry. Hope you saw the answer I posted just now on DOC.

Thanks for joining us today. We get a lot out of these too.

David S.

3:46

I own EPD, ET, and MPLX. I am now considering branching out into WES, but I am concerned about WES's dependence upon OXY. In fact, in the last oil crash, OXY stated they were considering selling part of their WES holding. . I would like your thoughts on WES and whether I might be better, simply adding to the three MLPs I currently own.
Thanks.

Roger Conrad

3:46

Hi David. I think that's a very reasonable concern. Western Midstream is still very integral to Occidental's Permian Basin production. But as you might have noticed in Energy and Income Advisor, we exited our position in OXY in favor of Permian Resources, which has a more compelling investment plan as well as execution history.

If you're looking for another MLP, I would consider PAA or PAGP over WES. The yield is about a point and a half less at 8% plus--but there's still a lot of room to grow it.

Mike C

4:00

Thanks for holding these each month, gentlemen! It’s always a great opportunity. Do you have any insights into over liquidity impacting US markets (i.e., I’ve read some who suggest Bessent is doing some ‘stealth QE’, but it’s hard to really pin down).?
All the best, and thanks!

Elliott Gue

4:00

The easiest and most straightforward way to monitor monetary conditions is to watch the weekly H4 statement from the Fed. During QE I like to focus on the asset side of the Fed's Balance sheet and during QT I like to focus on the liabilities side. Simply put, when the Fed buys bonds (QE), this shows up as an asset on the Fed's balance sheet (Central Bank owns T-Bonds). For the balance sheet to "balance" that has to be matched by a rise in liabilities -- the usual suspect is an increase in bank reserves held at the Fed. We used to call this "high powered money" because reserve balances basically back up credit creation across the US economy. Now, during QT, the Fed allows bonds to roll off its balance sheet which must be matched by a drop in liabilities. Basically, the Fed seeks to drain those reserves which acts to tighten credit and slow the economy. There are games the Treasury and Fed can play though around this basic relationship. One is that the central bank created a reverse repo facility that allows

Elliott Gue

4:00

banks and money market funds to park cash at the central bank to earn a short term rate near the Fed Funds rate. This shows up as a liability on the Fed's balance sheet and there were trillions parked in there, mainly by money market funds, two years ago. So, under Janet Yellen, Treasury stepped up issuance of T-Bills, which pay a slightly higher interest rate than the reverse repos -- this sucked up all that money market cash out of the RRP. So, this offset trillions of dollars worth of QT. But that facility is close to fully drained now. However, the bottom line from all this is that we haven't seen much of an impact on what really matters -- reserves which continue to hold well over $3 trillion. What Treasury "wants" is lower rates, which will make T-Bills less attractive and longer-term Treasuries more attractive. This will make it easier for them to sell longer-dated bonds without having auctions tail. If there is a more sudden loss of liquidity though it'll show up as a drop in reserves.

4:02

I would say that everyone is terrified to let that happen. That's because no one really knows what level of reserves are needed or would be considered "ample." It's likely non-linear in that reserves can drain and everything looks fine and then the whole system destabilizes, suddenly, as reserves fall below a certain level. Apologies as I know that's all a little esoteric, but hopefully it helps.

Arthur

4:15

Gentlemen, Thoughts on ESI? I failed to sell and now the stock has fnally recovered. Worth holding or selling and deploying the cash elsewhere? Thanks.

Elliott Gue

4:15

ESI makes chemicals used to manufacture semiconductors. It's a group I follow pretty closely in our trading services -- Income Options and CT Trader. I recommended ESI for a time in my CW service as well, selling out for about a 10% loss in late March. Semiconductors are actually at a key tipping point here from a technical perspective. If you look at SMH, an ETF that's a good proxy for the group, we're sitting right around $300, a level that's just above the summer 2024 peak. NVDA reports this week (tomorrow in fact) and AVGO early next month, these could determine whether SMH breaks higher or lower from here.

Elliott Gue

4:15

A move below $280 or so is a problem, not just for semis but for tech stocks as a whole. In contrast, a move above the recent highs could reignite the group. And this group can move quickly. Right now, I'd continue to want to be out of ESI as I don't like the binary nature of that outcome. Also, right now we're seeing rotation into more cyclical groups and out of tech/growth. So, I'm inclined to stand aside and perhaps lean back into the group for a trade or a longer-term recommendation depending on what we hear from NVDA and AVGO and, most importantly, how these stocks react to that news.

Don C

4:36

Elliott—do you have any update on Gold or the streaming and royalty companies? I really appreciate these monthly chats.

Elliott Gue

4:36

Thanks for attending the chats. I still like gold. Longer-term I think we'll see at least $5,000/oz. before this move is complete.

In my Creating Wealth service, we have held GLD to track gold. We added it back in late March of 2023 when GLD was around $175 compared to $300+ now. I did recently recommend selling about one-third of that GLD position near the current price.

This does not reflect a deteriorating outlook on the near term fundamentals but was mor tactical in nature. Simply put, gold has been consolidating for some time now near its highs and because of the 73%+ return since recommendation it had grown to one of the largest holdings in the portfolio. So, I felt it was prudent to trim the position a bit.

In addition, I see more near-term upside in silver, which is very cheap relative to gold. Generally, as gold rallies mature silver really takes off -- I think we see $50/oz in the next 12 months in silver and probably a lot higher than that if I'm right about gold. We are participating in

Elliott Gue

4:36

silver via the SLV ETF. I also recommend call options on SLV in my Income Options trading service. Our streaming pick is Wheaton Precious Metals (WPM) which we recommended in CW back in April 2023 in the $40s and it's up more than 100%, so much as with GLD I have recommended trimming that position and booking some gains. I still like WPM as a long-term holding but we have it as a "hold" in the portfolio for now. The royalty and streaming companies dramatically outperformed the traditional miners for most of the period since the spring of 2023 because they avoid the mine cost headwinds. Now, the miners look to be playing catch-up. So I am evaluating a list of mainly mid-sized miners (some smaller) as potential new additions in coming months. Basically, still an important them for us, but I am recommending some moves around the edges to book gains after a tremendous run-up. I also favor silver here both as a trade and as a gold "catch up" play for longer-term investors.

Pat M.

4:54

Hello Roger and Elliot,

I’ve owned Verizon for years. The stock price seems range bound. What are VZ’s prospects for getting it’s stock price moving?

Thanks for all your efforts!

Roger Conrad

4:54

Hi Pat. Thanks for joining us today. After today's trading, Verizon is up 15.5% year to date. The roughly 6% dividend is likely to be increased at another low single digit percentage next month. And the company increased its 2025 guidance last month, with the Frontier Communications merger set to jump start fiber broadband growth and convergence marketing by early next year.

The other thing going on in the telecom space is the Big 3--AT&T, Verizon and T-Mobile US--are continuing to gain market share. Today's announcement that Echostar is effectively giving up efforts to build a viable fourth wireless network accelerates that trend: They're selling all that spectrum to AT&T for $23 bil.

I don't think we should expect a sudden big move in VZ shares. But a succession of 15% annual returns that takes the price north of $50 is a very realistic expectation.

Roger Conrad

4:55

The AT&T deal kind of tipped the scales for me in terms of the feature piece for the September CUI--look for my analysis on telecom when it posts on the 8th.

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