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9/30/26 Capitalist Times Live Chat
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AvatarRoger Conrad
1:37
Hello everyone and welcome to our September Capitalist Times webchat. We want to thank everyone for joining us today and we look forward to your questions.
1:38
As always, there is no audio. Just type in your questions and we'll get to them as quickly as we can comprehensively and concisely. We will be sending you a link to the transcript of the complete Q&A tomorrow morning.
Per usual, we're going to start with some answers to questions we received prior to the chat.
1:39
Q. Thank you both for all your help in the past. Which Canadian LNG companies do you think will benefit from the world market changes coming up?--Frank D.
 
A. Hi Frank

We've been recommending a number of companies in Energy and Income Advisor that are tied into Canada's emerging energy exports from its Pacific Coast. As far as actual LNG export facilities, Shell (NYSE: SHEL) is the main owner and operator of LNG Canada--which is currently operating with the owners approving another expansion this month. Pembina Pipeline (TSX: PPL, NYSE; PBA) is building Cedar LNG in
partnership with the Haisla nation. And it's on track to start up in
2028.
1:40
As far as midstream transportation to LNG facilities, Pembina is
building assets. TC Energy (TSX: TRP, NYSE: TRP) is the main owner and operator of the Coastal GasLink pipeline, which is a major conduit for natural gas from the Montney shale in eastern British Columbia. And there are a number of producers in the region that should benefit from higher demand and better pricing. Ovintiv (NYSE; OVV) in the EIA portfolio is one.

We have an extensive Canada and Australia coverage universe with a wealth of other names that should benefit. Peyto Exploration (TSX: PEY, OTC: PEYUF) is one. Woodside (NYSE: WDS) is a partner at LNG Canada. ARC Resources has now been acquired by Shell. Look for more on this theme in future issues of EIA.
 
Q. Hi. Viper Energy (VNOM) has shifted their "return of capital strategy" from variable to a increased fixed base dividend of $2.00/share, secure even at $30 oil. Does this shift in FCF allocation change your dream price or buy up to price, or for that matter, your recommendation?--F
1:41
A. Hi Frank

I wrote about the Viper change recently in Energy and Income Advisor. Having a base dividend of $2 a share that it can maintain at much lower oil prices should build a floor of sorts under the share price. But the upside is going to come from variable dividends and stock buybacks--in addition to acquisitions of new royalty lands, including properties operated by companies other than parent Diamondback Energy (NSDQ: FANG).

The change in dividend strategy does not change my opinion or buy up to price for Viper. It's still a royalty company and it will rise and fall with oil prices--as cash flow is determined by how much third parties pump on its Permian Basin properties and realized selling prices for that output. And as we are long-term bullish on both, I would expect Viper's dividend and share price to rise considerably by the end of the cycle. It will not be a straight line up. And that means more volatility for VNOM versus midstream stocks. And that's one reason I want to keep a relatively
1:42
conservative entry point.
 
 
Q. Dear Folks, I would be interested in your views about VEOEY, which has just slipped below your dream price of $18. It looks like a number of other Utility stocks may be heading there (Dominion for example). But I am interested in the water space. How do you rank VEOEY as bonds rise and dividend stocks are selling off? Many thanks—Jeffrey H.
 
A. Hi Jeffrey

There's not much to report since Veolia released Q2 earnings in late July, which were actually quite solid. The company successfully sold low cost bonds in late August and formed a venture to deploy water tech in Saudi Arabia, which I reported in the Utility Report Card comments for the September CUI issue. But otherwise, this company continues to sign profitable contracts with strong counterparties as it always has.
1:43
I would view the drop in the stock as a buying opportunity in a very high quality stock. I also like the fact it's priced in Euros and therefore provides a dollar hedge. It could certainly slip a bit more on near-term weakness in dividend stocks. But remember that dividend stocks are not bonds. And over any meaningful holding period for income investors, dividend stocks perform just like other stocks--they do best when earnings are rising and interest rates are just one factor affecting business.
 
 
Q. I have 50 shares of Arc Resources but my broker is showing me with 20 Shell shares post the merger? Can you go over the math again?—Nolan C.
 
A. Hi Nolan

The acquisition of ARC by Shell closed September 2. So you received 0.40247 shares of SHEL per ARC share, plus CAD8.20 in cash. The CAD was converted to USD at that time, at an exchange rate of about 72 US cents per CAD, or $5.90.
Both the SHEL and the ARC shares should have shown up in your account by now and you should no longer hold ARC shares. The transaction would not have shown up on a paper brokerage statement for August. But it should already have online and will in September statements mailed early next month. If not, contact a live person and ask why.

Q. I just saw that Slate grocery store canceled its dividend, but I thought their numbers were good, What do you think of this company now? Is it risky?—Eric F.
A. Hi Eric

Slate billed the move as a capital allocation decision that was not
related to the strength of the underlying business. And I agree we
didn't see much (if any) sign of weakness in the numbers they posted
for Q2. The grocery anchored shopping mall business is pretty robust
just now, as we've seen from the strong Kimco numbers for example.
1:47
Shareholders were definitely not happy with the move and voted with their feet. But the next day, shares rebounded on no real news. My thought initially was management must have predicted that response. The language used by Slate's "Special Committee" when it made this decision seemed to imply the REIT may be selling itself. And it's certainly possible a private capital entity would make suspending the dividend a condition for later making a hard offer—though maybe management and certain investors were just trying to flush out retail investors at a low price.

In any case, this was a pretty strange, sudden and unexpected
decision. And that makes me think the best move is just to stand aside for now and wait to see what happens. Some kind of undisclosed risk certainly looks possible here--and it could well be from the impact of rising interest rates. Outright fraud can't be ruled out from our limited vantage point either.
I also see this as a pretty clear warning of more dividend cuts to
come--particularly in heavily leveraged sectors like REITs. But for
now, I'd wait to see what happens before committing funds to Slate.
 
1:48
 
 
Q. Hi Roger:

I just bought some FSLR near its 52 week low. It's 45% below its high in June 2026. Any updates? Regards--Kerry T.
 
A. Hi Kerry

I think you'll be happy with the purchase longer-term, though anytime you buy a stock on the way down it certainly can drop further. I currently have a "Dream Buy" for FirstSolar at 150. And after the big drop yesterday, there's a good chance it could go there near-term.

Obviously, there are a number of factors dragging stocks lower now. One is sheer momentum--with so much money concentrated in passive funds governed by algorithms, selling tends to be violent and fast. Another is rising benchmark interest rates, which could eventually threaten the economic viability of solar projects using the company's components. Trump Administration tariffs and other trade barriers continue to disrupt supply lines. And concerns that data center demand may not materialize have been dragging down electricity companies
across the board this month.
1:49
But FirstSolar is still the leading manufacturer inside US tariff
walls of a product that's in rising demand. Less than two months ago, it announced very strong Q2 results and affirmed guidance for 2026 output and sales. And judging from pre-Midterm election polls, the incoming Congress is likely to be considerably more favorable to the solar sector than the current one.

This has historically been a volatile stock. It's in a competitive
business. And it's possible Q3 earnings will show some strain from higher interest rates--another drop in order backlog possibly as fewer new projects are announced. But FirstSolar nonetheless has a pole position as the US national champion in solar panel manufacture, an industry that's come of age and is increasingly vital. And for the first time in a while, one could make a case it's a value stock at 10.6X trailing 12 months earnings.
 
 
1:50
 
Q. What has happened to cause the drastic drop in EXE and somewhat in EQT? What is your near term outlook, I have some call options expiring in January and am wondering if it might be a good time to roll them? Thanks a million for holding these chats.--Doug B
 
A. Thanks Doug.

North American natural gas prices haven't received a whole lot of press this year--with crude oil, gasoline, diesel prices etc
understandably in the spotlight. But in contrast to the very developed global oil market, LNG is still in its relative infancy. And natural gas is by and large still a "local" market, where pricing varies meaningfully.

In North America, benchmark natural gas has hovered under $3 per million BTU for most of the year. That's a price level that forces producers like Expand and EQT to focus on cost, rather than output. In fact, producers in higher cost shale basins like Haynesville are still acting quite conservatively.

We've seen oil and gas producers change places as sector leaders and laggards several times
1:51
since the energy upcycle began in mid-2020. Before Operating Epic Fury, the Wall Street consensus was there was a building global glut of oil and the oil-weighted producers were weak
relative to gas names. Now the shoe is on the other foot.

For many investors, the best way to play this is just to accept that leaders and laggards are going to keep trading places so long as this bull market lasts--which we think is likely to be several more years--and to stick with quality stocks. We've also been able to successfully emphasize in Energy and Income Advisor when we see oil or gas weighted names as a better place for fresh money, or even to take some off the table. But at this point, we see EXE and EQT as solid bets for this cycle.
 
1:52
 
 
Q. I watched HE make a strong move up earlier this year on what I thought was the road to recovery and normalcy. However it's taken a big step back and I haven't seen any news about what might be causing it. Do you have any idea what the problem might be and what timeframe HE is looking at for stabilizing and resuming dividends? Thanks for your help.--Doug B
 
A. Hi Doug

I think Hawaiian Electric's long-term recovery is still on track. The first payment has been made for the Maui Fire settlement fund. The state has enacted some pretty substantial utility wildfire liability reform. The company is making progress hardening its system against future weather-related events, as well as transitioning off generating electricity with imported fuel oil. The state is now on a 5-year rate and investment plan basis--which greatly increases certainty. And earlier this month, the company was able to sell 3.3% of American Savings Bank--one-third of its remaining holding--at a price well above the guidance range.
1:53
I think three external events have increased the perception that
recovery is going to take longer than people were envisioning earlier this year--when the share price was a good deal higher. First, the price of oil skyrocketed after Operation Epic Fury fallout closed the Strait of Hormuz. HE still relies heavily on oil generated electricity and it reported a 59.8% year-over-year increase in fuel oil costs in Q2. That's passed through to ratepayers automatically without a direct earnings impact. But so doing, it makes it a lot harder to convince regulators to allow recovery of other costs in a timely way. And fuel costs haven't dropped so far in the second half of 2026.

Second, rising interest rates have increased the prospective cost of issuing bonds to fund the rest of the wildfire settlement. And in the near-term, rising rates have triggered selling in utilities and other dividend stocks. And third, California's failure to pass meaningful utility wildfire reform has reminded people of liability risk and
induced selling of companies operating in fire prone areas.

Previous utility company recoveries from disaster have not been a straight line either. My view is if external conditions really
threaten Hawaiian Electric, regulators and the state will provide more relief--as they're already all in on this company's recovery. For example, the Hawaii PUC approved $350 mil of Wildfire Mitigation Plan spending back in June. And securitization provides another mechanism for the utility to get cash immediately while spreading out the burden to ratepayers over a period of years.

All of this is a slog. And it's possible the stock even slips a bit
more this year. I also don't anticipate a dividend until the Maui
wildfire settlement is paid in full--and very likely until HE is back
to investment grade. It's at BB- from S&P after an upgrade this
summer, which is 3 notches below BBB-. Good news is these things are likely to happen together. And the 5-year rate plan really does give management the ability to chart a
1:54
multi-year recovery. But I think it's going to take patience to play this comeback and I would not expect a dividend until 2028 at the earliest.
 
 
Q. Is BEP the best way to get a piece of Westinghouse when it goes public?--Eric F.
 
A. Hi Eric

I think Brookfield Renewable is a great way Cameco at 49%. And both the MLP units (BEP) and C-Corp shares (BEPC) look very cheap to me ahead of their planned unification into a single C-Corp share. That proposal is currently being voted on by shareholders--I just voted yes. And I would expect the shares to behave better than they have this summer, once that transaction has closed.

As for the IPO itself, two facts stand out to me. First, Brookfield
and Cameco are clearly trying to monetize a part of this investment at what they believe is an opportune time. Second, this is a pretty big IPO at a target of "over $50 billion." That implies BEP and CCJ have major investment plans--the question being how much they involve their investment in Westinghouse.
1:55
In my view, despite all the support from politicians just now, the US nuclear industry faces a massive challenge. That is to develop a model of a power plant that can be easily commercially replicated and that a utility/developer can take to regulators, lenders and investors with (1) A reasonable and defensible time to completion and (2) A reasonably fixed cost.

For all the hype and chatter, the major EPCs like Westinghouse can't currently provide those assurances. Westinghouse's AP1000 probably comes closest. But the two new units at the Vogtle plant in Georgia--though they appear to be running well--cost several times original projections and took nearly a decade longer to complete than promised. In fact, BEP/CCJ own Westinghouse now because that company couldn't fulfill its Vogtle contracts and filed bankruptcy. Southern Company went on to complete the project with the help of Bechtel because it had deep enough pockets and unshakeable support of Georgia
regulators. But SCANA took billions of dollars
1:56
of losses when it cancelled its two new reactors at the Summer project. And the utility mainly survived by being taken over by Dominion Energy.

Bottom line: Utilities still like nuclear--that much continues to be
clear in management's answers during earnings calls and other
presentations. But no company is going to order a new nuclear reactor until the EPCs can offer those ironclad assurances on cost and completion times--Mainly, that the utility has in writing commitments that neither it nor its customers are taking financial risk if those promises aren't met.

It's a very tall order, even with the Trump Administration and
Congress seemingly willing to spend a limitless amount of taxpayer money on nuclear. If anyone can do it in America, it will be Westinghouse. But until there's a viable design, utilities and power producers like Brookfield are going to focus on what can be built on a predictable schedule at as fixed a cost as possible. And right now, that's a lot of solar, battery storage and natural gas
1:57
I like Brookfield now on this deal because it will undeniably benefit from a successful Westinghouse IPO with a huge cash windfall. And they will benefit long-term as primary owners, if the AP1000 or some other model becomes commercially viable for those who might build it. But they're also building and operating all the things that nuclear competes with--and so far are winning the battle. And it's a very cheap stock.
 
 
Q. Thanks for the deep dive into state regulatory climates for utes. I was very lucky to exit HE 3 months before Lahaina. It was an inheritance, and I did not like the fact that it owned a bank which I believed was a drag on the utility.
I cannot countenance buying any ute operating in CA due to its regulatory climate. It is a deep blue state and is slowly losing businesses to states such as Texas which have an enlightened view of utility regulation. I also respect the regulatory framework-an ERCOT model would never be allowed in CA. I also favor the regulatory climates in GA (SO) and FL (N
(NE), altho I'm not excited about the D acquisition, but if anyone can make such an acquis work, it is NE.I did jump on FE during its troubled times when it was selling in the $20s and have added more as the stock has risen-Ohio has become business friendly and realizes the draw of abundant multi-sourced electric power. I think your piece makes a very strong case for evaluation of state regulatory climates and even the national regulatory climate (as the US is pouring money into various public companies) as a key factor in any decision to buy, sell or hold-right up there with financial considerations. Excellent piece!—James G.
 
 
A. Thanks James. Hope you found the follow-up and recommendations in the regular issue feature article helpful as well.
 
It's an evolving situation for sure. But end of the day, I think California has to put more money into the Wildfire Insurance Fund. And ultimately it has to adopt some version of "statutory rebuttable presumption" as 11 other wildfire prone states have.
1:58
Same is true for Nevada and Oregon.
 
Colorado and Washington haven't yet done so officially. But they're moving in that direction with Wildfire Mitigation Plans ordered in those states, which will make a formidable defence for utilities in those states against negligence lawsuits nonetheless. 
 
Bottom line--if California doesn't act, its utilities will have a more or less permanent higher cost of capital than industry peers. Ratepayers will pay for it. And it will be very hard for them to protect against future catastrophic wildfires.
 
Not to say the state is guaranteed to act in its own self interest. That's why there's such a big wildfire discount for its utilities--and potential upside if they do.
 
 
Q. Hi Roger. Long time subscriber here. Just wanted to get your thoughts on a couple of things. 
CWEN looks attractive at these prices, but after reviewing its investor presentation it is clear that their business strategy depends on expanding its. portfolio over time which requires access to both the debt and equity market -- ie. they are not self funding most of their growth. It seems like the company is vulnerable to higher interest rates and the stock market. A spike in interest rates will hammer equities, retarding CWEN's growth which could result in CWEN's stock collapsing. On the other hand, power demand is growing and the midterms will likely be great for the Dems who will favor renewables.
 
Secondly, regarding NEE -- I was dismayed to read the piece in the Washington Post this week from NEE/Dominion's CEOs promising expanded give aways to push the merger through. Seems like they are giving away a lot of the near term potential synergies. NEE is a good company but they have done very stupid things in the past, and I wonder if this merger is another example. 
 
1:59
Just curious as to your thinking...Best--David F.
 
 
A. Hi David

I agree Clearway Energy's growth plan depends on (1) Being able to execute on portfolio expansion, primary through acquisitions from its parent Clearway Group--which is 50-50 owned by Blackrock and TotalEnergies (NYSE: TTE), and (2) Being able to secure financing for acquisitions on favorable terms. They are in fact self-funding most of what they're spending. And most of the company's debt is actually held
at the project level, rather than as recourse to the parent.

They do have to raise capital periodically. But I'm less concerned about interest rates' impact going forward because (1) returns on investment are rising as demand is robust and the company is increasingly able to increase productivity and renewal power sales rates on its current facilities, (2) the rising rate environment we're in now began in 2022, so management has been adjusting strategy for some time to higher for longer borrowing costs and (3) Clearway Group's parents have
2:00
been willing to adjust terms of drop downs to keep them affordable at Clearway Energy. Growth has also continued
since 2022, which is a testament to their ability to keep funding
expansion. I think management's statements are telling that the
current drop down pipeline is far more than enough to maintain the company's projected growth rate--so they could pull in their horns a bit and still make it.

This is not to say Clearway shares won't be volatile. And as usual, we're seeing selling of dividend stocks in general in the near-term. But at this point, it looks like Clearway's growth story is intact and that Q3 results and guidance will confirm it.

My view is NextEra/Dominion are in a negotiation in Virginia to win approval from regulators and politicians--especially Gov Spanberger. But I don't see the recent added sweetener as in any way undermining the economics of this merger--which is actually more predicated on achieving growth faster than cutting costs. We'll get more details on how things are going
when NEE reports next month, followed by Dominion. But so far this deal appears to be on track to close early next year. And if should be a growth spur for NextEra--being able to deploy America's top power construction supply chain to build out the
massive demand growth in Virginia--no Colonial Penn  investment if you go back with the company as far as I do.
 
 
Q. Hello Roger and hope this email finds you well. We have been taking a beating on our BEP investment. My concern is a dividend reduction and/or falling below the 52 week low. You have any words of encouragement or thoughts on the investment? As always, thank you!--Steve W.
 
 
2:01
 
A. Hi Steve

I don't think a dividend reduction is in the cards here. First off,
they've never cut--even when they had to convert from a Canadian income trust to a corporation back in the '00s. They also have a strong cash flow cushion backed by long-term contracts with strong counterparties and a good balance sheet. And the boost in guidance with Q2 results is a pretty good sign business is still booming.

BEPC is down abou -21% this year. But BEP is still up 11%. So much of what's happened in BEPC is simply the erasure of the former C-Corp premium to the MLP units--when the company announced it was combining them. There has been some selling of power stocks most associated with the AI/data center boom. Brookfield's exposure though is long-term contracts with leading Big Tech firms (Amazon especially). So while demand growth may slow, current cash flow is not at risk. And there
are multiple paths to grow that don't involve US data centers.
I think we're going to see another round of strong numbers and
guidance in early November. And I would view a deeper decline in BEP/BEPC is a good time for those without positions to add shares--the rest of us to just sit tight.
 
 
 
2:02
OK that's what we have in the email queue. Let's get to some live ones.
Eric F
2:07
I see it often said that the Eaton fire was started by a long deactivated line. How does that happen if it’s deactivated?
AvatarRoger Conrad
2:07
Hi Eric. According to CALFire, weather conditions re-energized the powerline, which then fell apart and dropped hot metal shards into very, very dry grass.

It took them a year and half to reach that conclusion--which is a pretty clear sign they reached it more by process of elimination than the evidence. This is a point made by Edison's CEO months before the official ruling--that no other plausible explanation had emerged, so they laid blame on the most probable cause, which was determined to be the inactive powerline.
Phil C.
2:14
Hi Elliott,

You presented information on the Vaca Muerta Shale in Argentina a while ago. Can you have any plans to start coverage of Argentina focused oil and gas companies such VIST, YPF, GPRK, PAM, TGS? 

Thank you
AvatarElliott Gue
2:14
Thanks for the question. While we haven't formally added them to the coverage universe, they are all names I follow, particularly YPF and VIST. I will likely follow up with additional commentary or future articles as the Vaca Muerta remains the most advanced shale field outside the US. Right now, in terms of the model portfolios, we see better/more timely opportunities elsewhere but those are all names I have on my radar screen that we'd consider adding to the model in future.
Gary C.
2:15
Love these chats:

AQN has continued to drop and the financials still seem to support your recommendation.

Please provide an update and any insight. Buy more - hold ?? 
Thank you
AvatarRoger Conrad
2:15
Hi Gary. Algonquin will announce Q3 results and update guidance in mid-November. The most recent significant news was the company has reached a deal to sell its Chilean operations for cash, which it will use to further reduce debt. And two research houses issued buy recommendations--citing progress toward becoming a "premium regulated utility."

I think you can attribute a good bit of the price weakness to the selloff of utility stocks in general. The XLU--Utilities SPDR ETF--is now underwater more than 5% including dividends paid year to date, after leading the market in first half 2026. And the selling seems to be coming from cooling on the AI theme, worries about the election and rising interest rates.

I think the sector including AQN will again affirm growth projections are on track in the next few weeks. And I think we are seeing a nice buying opportunity for many stocks that have been out of reach up until recently. And I explore them in the Oct CUI, which will post Monday.
Michael D.
2:20
Roger,
I have followed yourself for many years since your early times with Stephen Leeb, and have learned to trust your advice on my stocks.

Appreciate your alert advice recently on EIX. I wish you would advise and alert us more between news letters.

Recent falls with AWK, NEE, and TRP for example have bother myself a lot, especially when services such as Zack’s recommend selling these.

I would just appreciate some comforting advice when things like this change.
Otherwise I hope you will be with us for many more years!
AvatarRoger Conrad
2:20
Hi Michael. I don't what criteria Zacks uses to make buy/hold/sell calls. I suspect it's a lot of technical analysis combined with the reflex to sell dividend stocks when people are worried about rising interest rates.

But there are no ongoing business developments to merit worrying about American Water, NextEra Energy or TC Energy--which up until recently was trading well above my maximum entry point.

I do publish weekly commentary now on Substack as Dividends with Roger Conrad. Some of it is behind a paywall but there's a good bit above it.
Barry B.
2:21
Venture Global: What will be the catalyst to propel VG higher and when do you expect it to happen?
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