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Howard F
9:42
What infrastructure stocks would you be a buyer of now
AvatarRoger Conrad
9:44
That depends on what you mean by infrastructure I guess. In a conventional sense, we do have an Aggressive Holding that is actually a utility with a construction services and construction materials arm. MDU Resources (NYSE: MDU). It's a buy up to 27.
Dave
9:44
Your thoughts please on MDU.  Still a buyout target or should it be split the non regulated portions in to a separate company to
AvatarRoger Conrad
9:47
Good timing with this question. I think that's certainly always a possibility. Up to now management has not been interested, arguing that the stability of utility cash flow and dividends is the ideal ballast for what's a very cyclical business in construction. We have seen several companies in the essential services space targeted by activist investors, notably Elliott Management. The interest has triggered share price gains for Sempra Energy, which has shed some assets to strengthen its balance sheet, though maybe not enough yet for these investors. Elliott has actually taken control of Telecom Italia's board, though results have been less successful.
9:48
My opinion is MDU is solid as a long term holding in its current form. But if there is an effort to break it up, we'll have an opportunity for a short term gain. Either way, I like the company.
Michael L
9:48
Roger, I believe that UGI has said they will disclose their decision on what they will do with Amerigas in late April. Is that correct? Great work, by  the way.
AvatarRoger Conrad
9:50
Thank you very much! You are correct that they have said they would disclose their decision in late April on the strategic review. Of course, last year they hinted the same thing for this earnings season, so I guess they're taking their time. I've talked at length earlier in the chat about what possibilities I see for the outcomes. I should say though
9:55
that I don't have a seat on the board of UGI. Nor am I what I used to call a long distance mind reader. So basically, what I've posited are just best guesses of what I think the possibilities are. The only three things I'm pretty certain about for Amerigas are: They are by far the best in class propane distribution company in North America and have proven their business model despite some extremely volatile weather conditions that have really hurt competitors, (2) at the current valuation there's a great deal of fear reflected from investors, and (3) there's no reason to expect UGI will give us a raw deal. In fact, the 17.6% increase in insiders' holdings since UGI started talking strategic review could be construed as indicating the opposite. Certainly what we've seen the past few years with MLPs is reason to doubt anything good can happen. But those three reasons are why I'm sticking with APU at least until the review is done.
9:57
Thanks everyone for your questions. I still have a few received by email that I'll post. While I'm doing that feel free to post.
9:58
Q. Can I use any recommendation in a retirement portfolio?—Larry Z

A. Absolutely. That goes for MLPs as well by the way if you’re talking about IRAs. You have to have $1,000 in unrelated business taxable income for any additional tax to be due, which is only possible if you’re holding tens of thousands of units. And you will be able to shelter capital gains as well.
10:05
Q. Hi Roger. Lot of flu an colds going around all over the country. Hope you’re better soon. Had some questions about selling, or holding on to, the following: FAX Aberdeen Asia Pacific Fund, GEL Genesis Energy,
CPXGF Cineplex (Canadian) and APU Amerigas Partners. Thank for you hard work and research!--Mel W.

A. I am feeling much better thanks, just a severe and thankfully short case of stomach flu. I think you hold onto FAX at these levels. They’ve done a good job hedging Australian dollar exposure. And while closed-end bond funds are always somewhat opaque in terms of what they hold, they do have a great long-term track record. I’m not crazy about Genesis, which is still basically a hodgepodge of assets collected with the goal of paying a dividend and no real scale. I liked it a lot a decade ago. But unlike Enterprise they never focused and while the lower dividend should hold, I think there’s a lot more upside elsewhere. While I don’t directly cover it as I did back in the Canadian Edge days, I am still a
10:06
still an admirer of Cineplex, which has continued to grow its franchise and dividend. Earnings are up tomorrow but I think the underlying business fundamentals will stay strong and I’d keep on holding. I won’t repeat what I said about Amerigas but I think we hang in there a little longer, at least until this strategic review results clear the air.
10:09
Q. Hello Roger, do you feel better entry points are coming?  Market has been on fire lately and I don't generally chase. Curious on your opinion. Thanks--RD

A. That’s definitely my opinion in many stocks as I noted in the February issue of CUI in the Portfolio Update section. In fact, some stocks are trading at levels where portfolios heavy in them should consider taking a profit. That includes some of my absolute favorites like NextEra Energy and WEC Energy. On the other hand, there are still many below target as I point out throughout the issue. The key is not where the overall “market” is but where the stocks you own and want to own are. You can always find a great entry at a point of weakness even in a bull market—That’s actually how I got into NextEra a few years ago on a drop under $100 and it’s now over $180.
10:12
Q. Hi Roger, Just a quick clarification question. In the most recent issue, you have Atlantica Yield (AY) as a buy to $24.00 in the table on page 3, but in the text on page 4 you have it a buy to $17.00, which below it's current price. I assume it is a buy up to $24.00 since your buy targets on Pattern (PEGI) and Amerigas (APU) are below their current price and your advice is to buy only on dips below the recommended buy price. But can you clarify which of the two Atlantica numbers is your recommendation? Thanks so much.--Andrew Z.

A. The target is still $24. I apologize for the confusion and will make sure we correct it next time. I think it may be a while before we get to $24, with the market wary of renewable energy generators in the wake of the PG&E bankruptcy filing. But I like the assets and I think the strategic review will bring good things as I noted earlier in the chat.
10:16
Q. Can you comment on Brookfield Infrastructure Partners (BIP)? Your recommendation on this name or perhaps one you like better? Thanks—John C.

A. I’ve always considered BIP unwieldy and unfocused compared to the rest of the Brookfield empire, which as you know I’m generally bullish on. Investments in the family I prefer are Brookfield Renewable Energy Partners (NYSE: BEP) as indicated earlier in the chat, as well as Brookfield Property Partners (NYSE: BPY), which owns a focused collection of commercial properties on a global basis. Again, BIP like those two does have a good track record of adding assets and raising dividends—including a boost earlier this month. But I believe focus yields better results longer term.
10:19
Q. Hi, Roger, hope the New Year is going well for you. During the chat would you update us on your 10-point bear market checklist and where we stand regarding an analysis of the leading economic indicators and whether we can reasonably rely on those indicators to determine when to lighten our participation in the markets? Thanks--James C

A. James, I hope I’ve answered this question for you at least once during the chat. Bottom line is 8 of 10 are still flashing green and another (Fed policy) almost certainly will later this year. If you’re interested in more detail about the system, I suggest you drop a line to the original architect, who is my long-time friend and business partner Elliott Gue at service@capitalisttimes.com
10:26
Q. EQM seems like they increase dividend and price keeps going down. Are still sticking with it? And have you ever recommended UTG?—Bob J

A. It seems the same way to me as well Bob regards EQM Midstream. The good thing is our income stream continues to rise and as earnings announced today show, some pretty secure and rising cash flow streams from solid assets are backing up that payout. I think there are several potential catalysts that could reverse the trend for EQM this year. The biggest is simply getting the Mountain Valley Pipeline up and running by the end of the year. It’s more than 70% complete but still has some permitting issues to navigate. And fear is running high that opposition fueled by anti-Trump money will still find a way to block it. On the positive side, expectations are low that the company will meet its schedule, so if it does we can expect shares to move higher. Other than that, it’s really just blocking and tackling, i.e. posting good numbers as EQM most certainly did today. That’s wh
That’s what I expect and I think the value proposition with this MLP is outstanding so long as that’s the case.
10:34
Q. Any "good" news on Altagas?  You've had it as a "hold" since November and justifiably there's been very little movement in that time period.
It seems that the WGL acquisition and their "inability to permanently fund the transaction" is a sign of a very inept management. And with their track record, I don't know how much confidence to put in their Feb 28th conference call. But I also don't like taking a 50% haircut if there is any sign of improvement.—Ron K.

A.Thanks for the question Ron. I pointed out some good news on Altagas earlier in the chat, including the fact they are executing the promised asset sales and the propane export facility still appears to be on track. It also looks like WGL had a good winter quarter, given the extreme temperature swings in the Washington D.C. area this year. On that basis, I have raised the stock to a buy ($12 or lower) on a valuation basis on the premise that recovery is underway and the assets as constituted are sound and offer considerable opportunity for growth
10:35
going forward. We can talk all day about whether management should have gone ahead and issued stock two years ago when it first announced a takeover offer for WGL. I’m sure they wish they had. But you should know that this is not the same management team as ran the company then. It’s a whole new crew led by Randy Crawford who is a long-time industry veteran. They've already taken decisive action to turn things around and I'm anxious see what they have to say on Feb 28.
10:37
Well that's all we have in the live queue as well as email for this CUI subscribers only chat. I want to thank everyone for participating this time around and especially for subscribing to Conrad's Utility Investor. This chat has given me some ideas for themes and coverage that I will be following up on. In the meantime, you can feel free to write us at service@capitalisttimes.com
10:38
One last note: There will be a complete transcript of all questions and answers available sometime after I close this chat, which is now. We will be sending a link to you as well as posting it on the CUI website.
Thanks again for tuning in everyone! I look forward to chatting with you next time.
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