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May 2026 Capitalist Times Live Chat
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AvatarRoger Conrad
1:52
Hello everyone and welcome to our Capitalist Times live webchat for May. We’re looking forward to a lively session today.
 
Per usual, there is no audio. Please type in your questions and we’ll get to them as quickly as we can. As always, we will be sending you a link to a transcript of the complete Q&A sometime after the conclusion of the chat, which will be when there are no more questions left in the queue, or that we received and answered prior to the chat.
 
We’ll start with some questions we received prior to today’s chat. Then we’ll get to the live ones.
Thanks again for joining us today.
 
Q. “In the latest EIA update the Endangered Dividends table shows Petroleo Brasileiro (PBR) as a moderate risk for a -50% dividend cut. Can you update your latest thoughts on PBR ? I would have thought that all non-Persian Gulf producers would see an improvement in their operations and cash flows while the conflict continues.” Thanks, David L.
 
 
A. Hi David

Petrobras should be a beneficiary of energy importers' need to find
alternatives to Persian Gulf oil and gas. Projects in the pre-salt off
the coast also look more attractive to the domestic market in Brazil,
and by extension the government--the company's most important
shareholder by far. And in fact, we're already seeing a step up in
activity, with Baker Hughes winning a big contract earlier this week.
PBR itself had record production in Q1 as well.
There are, however, two challenges with the NYSE-listed ADRs for the
stock. One is it's already up 60% year to date, so a lot of good news
has already been priced in. Two, PBR is a state owned oil company that
offers ownership to the public--so it's always going to put the
welfare of the home country ahead of its other shareholders. The risk
to the dividend is basically that the company has a long history of
spending aggressively to raise production--rather than exercise shale
discipline.

So far in 2026, PBR ADRs have paid total dividends of about 74 US
cents. Through the first five months of 2025, it was about $1.05. The
company may make that up the rest of the year, especially if global
oil prices stay near $100 a barrel. But this is a pretty good example
of how a state owned oil company should be viewed a little differently
than say Chevron, or ExxonMobil.
 
 
 
Q. Hi Roger,
Do you know yet what you will do if the merger between Equity Residential and AvalonBay is completed? Will Equity Residential
1:53
replace AvalonBay in the First Rate Reit list? Thank you.--Teresa P.
 
 
A. Hi Teresa

I like the AvalonBay/Equity Residential deal. The residential REIT
sector has been facing headwinds lately from higher for longer
interest rates, construction cost inflation and overbuilding from
previous years in many areas. But scaling up should provide a lot of
opportunity to cut costs and better deploy resources.

I plan to stick with the position in AVB and swap it for the new
company when the merger closes--which should happen later this year.
 
Q. I was just looking over EOG and don't own any. But the PE is 8? Is that for real? And aside from that quick peak in March, it looks like it has been trading sideways for about 4 years now. Earnings look like they are improving year over year, looks like a good amount of share buy backs, so what give with the price? –Eric F.
1:54
A. Hi Eric

Hope all is well.

EOG is up about 30% year to date including dividends. And the stock is up about five-fold since the March 2020 bottom--which was not coincidentally (and with 20-20 hindsight) was the low point of the
long-term energy price cycle.

The company is a premier independent producer and weathered the 2014-2020 downcycle while continuing to grow the business and raise dividends. Now earnings are benefitting from the upcycle but also
management's focus on cost and improving efficiency. It's coming off a solid Q1 in which it generated $1.5 bil in free cash flow--covering the dividend by nearly a 3-to-1 margin and funding $402 mil in stock
buybacks as well as debt reduction. Per unit cash operating costs topped management's guidance as did production volumes. And the company raised its full year production guidance for oil and NGL.
Efficiency improved throughout the multi-basin portfolio. And debt-to-capitalization was reduced to 20.4% from 21% at the start of the year.
1:55
Bottom line, this is a great company. The challenge right now is finding a good entry point. We would wait for a dip to 125 or lower.

Regarding EOG's P/E, the figure I see is 13.2X trailing earnings. But oil and gas producer earnings can be extremely volatile from quarter to quarter because realized selling prices can vary widely, even with
aggressive price hedging. So in my view, P/Es are not a very useful gauge of value for commodity producers as they are for utility stocks, for example, since that sector's earnings tend to be far steadier and not directly impacted by commodity prices. In fact, P/Es will tend to be lower for oil and gas producers when commodity prices are higher--and the cycle is closer to a top.
 
 
Q. According to what I have read D & NEE are trying to merge and NEE is trying to merge with QUANTUM and they plan to start another company with the letters NEQ. If they succeed do you think it will have any effect on XIFR? Thanks--Nolan C.
 
1:56
 
A. Hi Nolan

NextEra's deal with Quantum is basically a joint venture to own and manage oil and especially natural gas shale assets--which they may allow the public to invest in through a new company NEQ. The first
investment is a $1.3 bil acquisition of Caliber Resource Partners--for which Quantum is a private equity backer. The gas will complement NextEra's ownership of gas pipelines (Mountain Valley Pipeline 30%) and especially natural gas power generation. The utility is already the largest US power producer from gas. And its needs will be much greater after merging with Dominion Energy. It also has a contract to build and operate 10 GW of gas generation, which will be owned and financed 50-50 by the US and Japanese governments.
XPLR Infrastructure at this point doesn't own any natural gas generation or other infrastructure. It has in the past owned a pipeline system in Texas. And theoretically, when it completes its turnaround plan and retires the remaining CEPFs--and becomes a viable capital raising vehicle again for NEE--we could see some gas investment. We could also see the company in the running for investments that serve data centers in Dominion Energy's northern Virginia territory. But at this point, there's no direct connection
between what's going on at XPLR and NEQ, or even the Dominion merger.
 
 
Q. Hi Roger,
 
Do you think it will do us any good to vote "No" on the merger? I will anyway but I would like to know your thoughts on the subject. Thank you—Teresa P.
 
 
1:58
 
A. Hi Teresa

As an AES shareholder myself, I just received my ballot for the merger. And I have returned it with a "no" vote, as I do believe this offer "low balls" AES' long-term value. But I intend to hold onto the stock either way.

Management has threatened to cut the dividend if the deal fails, so it will have more cash to spend on CAPEX opportunities. I think it's more likely they'll instead be out if the deal fails and/or they try something like that. But in any case, I'm prepared to stay with the stock despite dividend cut risk.

For one thing, I think it's worth another run to 30 or higher if the company remains independent. But also if this deal does close, we're going to get $15 per for our shares. And added to the dividends still to come, that's a high single digit percentage return from the current price.
1:59
As for the prospects for the offer itself, I do think it's noteworthy how management has basically gone to ground after announcing the deal--not even so much as a press release, let alone a guidance call where they have to field questions. They also pulled the "consent solicitations" at the Ohio and Indiana utilities without securing enough votes for approval. And they'll ultimately need them to close the deal.

Again, it's hard to tell what's really happening here with management basically freezing out the public, including the company's investors. But this deal could be in trouble. We'll see what happens.
 
 
Q. What's your opinion of AMLP, which holds MLPs inside a 1099-issuing ETF wrapper ($330,000 at 7.8% yields $25,740). Investors get pipeline exposure without the K-1.?—Mr G.
2:00
A. Hi Mr G

I think investors are always best off owning individual stocks when investing in an area they know well. AMLP is heavy in all the biggest MLPs. So it will go where they go. That's not necessarily bad. And
there is a lot of overlap with our portfolio. But it's also very heavily weighted in just a handful of names--including 14% in Western Midstream currently.

There is the advantage of not filing a K-1. But that also comes with forfeiting any tax advantages.
 
 
Q. Is it time to reconsider XPLR?--Mr G
 
 
A. Hi Mr G

As a buy up to 12, certainly. For anyone already in the stock and betting on recovery, there's no reason to do anything but just stick with it. If anything, NextEra Energy merging with Dominion could open up more
opportunity for XPLR to invest in data center projects. But their recovery plan depends solely on executing their investment, operations and financing plan. And none of that should be affected at all by parent NextEra extending regulated operations into the Carolinas
2:01
and Virginia.
 
 
Q. I have read that refined copper is going to become even scarcer than it is today.  Scientific American wrote this in a recent newsletter (Today in Science):
 
Demand for critical minerals like copper and palladium far outpaces the rate at which such materials are mined. The global refined-copper shortfall will hit 330,000 tons this year and could widen to as much as eight million tons by 2035, according to one source.
 
Are you looking at any stocks to take advantage of this shortfall? Thanks—Larry W.
 
A. Hi Larry

If you're looking for a conservative way to bet on copper, you won't do much better than BHP Group (ASX: BHP, NYSE: BHP), which is making a
massive global investment in production. The company also has a massive presence in iron ore and metallurgical coal used to make steel and a strong position serving the Chinese market. And next year, it
will open a giant potash project in Canada--making it a major player in global fertilizer.
2:02
Freeport McMoRan Inc (NYSE: FCX) is the largest US based player in copper and has powerful opportunities globally. The stock is somewhat more expensive than BHP, however.
 
Q. Alexandria REIT (NYSE: ARE) - While doing research I see a huge hit to net income for Q4-2025, then a big boost to net income for Q1-2026, can you help understand that? And a Q4-2025 dividend payment that was 10x the current dividend? I also see insider buying now. How do you feel about this one, has it stabilized?—Eric F.
 
A. Hi Eric

Alexandria REIT did have a decent Q1 and was therefore able to tighten
its full year guidance for FFO. That was despite a slight reduction in
expected occupancy, as new campus properties are taking a bit longer
to fill up. But management was able to offset the impact with leasing
activity elsewhere and cost management. I think this company will
continue to face headwinds this year as the biotech sector wrestles
with a fifth bear market year and erratic US government policy on
funding research. But they
2:03
Q. Hi – Both of you do a super job with these monthly chats. If I can’t join live I always insure I read the transcript. What is the latest news on AES? I like many am disappointed that after hanging in with the company for many years a $15 buyout is a huge letdown. If time allows I have a second question which is your current view on BEP. The pricing gap vs BEPC has narrowed which could be good news for those of us holding the MLP if the company’s market value increases. Thank you – Joe T
 
A. Hi Joe
Bondholders at the
Indiana and Ohio utilities have not approved the consent solicitation
required for this deal to close--could be a portent that the
shareholder vote will fail as well. But in any case, my view remains
this is a $30 stock if the company stays independent, though we may
see a dip in the immediate aftermath of a pulled offer. And if it
closes, we get an upper single digit percentag
percentage return from the current price including dividends just for holding on.

I've been a little surprised at how fast the price gap between BEP and BEPC has closed. And I'll be very interested in the terms of any future BEP to BEPC conversion opportunity, including taxability. But more important, Brookfield Renewable is growing rapidly globally in multiple opportunity areas. And that should ultimately push up both the MLP units and C-Corp shares.
2:04
Well that's all I have from the pre-chat questions. If by any chance you don't see yours answered, I apologize. But please type it in again. Thanks!
Denisimo
2:13
Elliot & Roger: 

You have suggested that KMI and & other C Corp MLPs would be prone to a price drop once the Middle East oil transportation appears to be 'resolved'. 

How far would you guess-ti-mate they could fall, and how long before they recover and continue their uphill rise?
AvatarRoger Conrad
2:13
Hi Denisimo. My main problem with the midstream C-Corps is they continue to trade at a such a massive premium to MLPs that are just as healthy and growing equally fast, if not faster.

One of the pre-chat questions I answered concerned the rapid closing of the price gap between C-Corp shares (BEPC) and MLP units (BEP) of Brookfield Renewable over the past month.  Both represented the same ownership and paid the same dividend, BEP's tax advantaged. But K-1 phobia and institutions inability to buy BEP had created a price gap that reached 30% at times. And all it took was for management to hint at some kind of future conversion mechanism for BEPC to come own and BEP to rally, though I actually like both as long-term investments.

At this time, Kinder Morgan yields 3.7% versus roughly 7% for Energy Transfer, which is actually growing its payout twice as fast. Williams yields less than 3% versus 5.9% for Enterprise and so on.

That's a massive yield advantage that will pay for additional tas filing fees.
AvatarRoger Conrad
2:17
But the real vulnerability of the C-Corps is that they--unlike the MLPs--are primarily owned by institutions that have shown they will dump all energy stocks enmasse on what Elliott calls "deescalation" investment themes. The midstream C-Corps have obviously benefitted greatly from "escalation" themes. And I wouldn't rule out another oil spike pushing them higher. But all you have to do is look at the price action when people talk about peace to see they're much more vulnerable to deescalation themes than the higher yielding MLPs.
Tom L.
2:20
In the last EIA Newsletter, a comment was made about the discipline of the suppliers and that because of that the oil price would stay higher for longer. In Trump's Wednesday's (5/27) cabinet meeting, Doug Bergum described the revenue coming from the leases being made on public land in the Permian, Bakken, New Mexico, and the North Slope of Alaska. These sales brought in $4 billion of revenue to the US Treasury. I don't know how to size that revenue with the amount of oil that may be pumped, but it seems logical to assume the buyers of the leases would want to recoup that money through drilling and selling of oil and natural gas. Can you square that activity with your "higher for longer" forecast?
Thanks
AvatarElliott Gue
2:20
Federal leases typically involve an upfront payment, an annual rental payment or holding fee and then a percentage revenue share of oil and gas produced.  So, because oil prices are high right now, the royalty share for oil leases (particularly offshore where revenue rates are higher) would be elevated. Texas has very little federal land, but the New Mexico Permian is roughly 60% to 70% federal leases. In the most recent bidding round, we saw Devon Energy and Matador Resources grab federal leases in Lea and Eddy County New Mexico. The former appears related to their acquisition of Cottera Energy and, I think, a major criticism of DVN has been their lack of adequate scale in the Permian. Matador, that appears driven by a desire to put together larger packages so that they can drill longer laterals. But, securing drilling locations and drilling additional wells are two different things. We have not seen a major ramp up in CAPEX related to drilling and completions from any of the majors
AvatarElliott Gue
2:20
or independent operators. They mainly want to build up a large inventory of drilling locations but are in absolutely no hurry to produce them to chase high front-month oil prices. Halliburton noted that the main increase in activity they're seeing are smaller independent producers though, following several years of consolidation in the Permian, there just aren't many independent/private producers any longer.
Denisimo
2:23
Elliot & Roger:
 
You have suggested that KMI and & other C Corp MLPs would be prone to a price drop once the Middle East oil transportation appears to be 'resolved'.
 
How far would you guess-ti-mate they could fall, and how long before they recover and continue their uphill rise?
 
Denisimo
AvatarRoger Conrad
2:23
I guess the second half of your question is how far they could fall near-term on an outbreak of peace in the MIddle East. I think for Kinder, certainly we'd have another chance to buy in the mid to high 20s. ONEOK would likely move to the 70s. And I think Williams would wind up high 50s/low 60s.

Those are guesstimates, so take them for what they're worth. i do believe one of the more permanent outcomes from Operation Epic Fury is that all North American midstream and producers will trade at a higher premium--as a safe source of oil and gas. And I think the political/regulatory environment has created opportunities for asset expansion in energy friendly states that will provide a big boost to future cash flow.
Tommy L
2:27
You have MAA rated a 'hold" in your CUI+ letter.  What is your current thinking on this REIT?
AvatarRoger Conrad
2:27
Hi Tommy. I've since upgraded Mid-America Apartment Communities back to a buy, though at a lower max entry point of 150.

I thought Q1 results continued to show progress with stabilization of occupancy and rent growth, as the SunBelt in particular absorbs years of overbuilding. And the improvement in FAD--funds available for distribution--should alleviate concerns about cash flow and the dividend. The guidance call presentation also had a lot of color about the REIT's key markets, which was very encouraging.

MAA has performed well since the announcement. And I think bottom is likely in. It now looks like it will be at least 2027 before new lease rent growth turns positive. But I'm comfortable being patient with this blue chip a while longer at least.
Dwayne E
2:31
Although Nat Gas prices are trending up and today more significantly, why do you think companies like EXE and EQT are not responding to the upside?
AvatarElliott Gue
2:31
Changes in the front month really don't drive the producers, you have to watch the whole curve (the calendar strip). The July 2026 contract is up to $3.28/MMBtu today, but out until November/December most of the contracts are hanging in that $3.25 to $3.50/MMBtu range and if I look out to next summer (summer 2027) we're still in that same range. Both EXE and EQT are OK with the calendar strip as it is. EQT has the lowest cost base of any dry gas producer in the US, which is why the stock has been a relative outperformer. EXE's Marcellus acreage is fine at current calendar strip, but their Haynesville acreage just doesn't produce a lot of free cash flow at the current strip pricing. Our view is that the outlook for gas demand and exports is strong, and there are lots of potential upside catalysts for gas, however until we start seeing average pricing climb back to that $3.75 to $4.00 region you're not going to see a major re-rating of the stocks. As we said in the last issue, EQT will outperform in relative
AvatarElliott Gue
2:31
terms when gas prices are weak. I think EXE is enormously undervalued because, over the long haul, we're going to need Haynesville volumes and that means we'll need to see gas prices average over $4.00. AT that price, EXE generates copious free cash flow.
Brian
2:32
Hi Roger, can you explain NEE’s purchase of Dominion. It seems like we receive additional shares of NEE , but there was mention of Dominion’s dividend being cut to .50 cents.??
AvatarRoger Conrad
2:32
Hi Brian. The deal has a fixed ratio of NEE shares that Dominion shareholders will receive. My estimation of the lower initial dividend for Dominion owners after the close is based on (1) The exchange ratio, (2) NextEra's projected dividend at the close which will include at least one increase of 6%, and (3) Dominion's currently frozen dividend.

I did not include the special cash payment to Dominion shareholders at the close that should substantially offset any reduced regular dividend payment. I did mention the fact that post-merger NextEra will continue to increase dividends after the close and that Dominion shareholders should be receiving bigger and much faster growing payments within 2 years of the merger than we're receiving now.

So I don't consider the dividend situation to be a deal breaker. We're going to wind up making a lot more as part of a bigger and stronger company than either of these blue chip utilities are independently.
Jerry
2:39
Roger & Elliot, I got the AES proxy vote and turned down the $15.00 offer. Would recommend buying more shares, currently own 200 shares.
AvatarRoger Conrad
2:39
Hi Jerry. As I indicated answering a pre-chat questions, I've also now voted my shares as a no.

I have rated AES a buy at 14.50 or lower since this deal was announced nearly three months ago--and it has traded there. The reason is at that price, a buyer would still receive a return of around 10% if the merger closes, additional price appreciation plus dividends paid. Above that level, the returns obviously shrink.

Long-term, I think AES makes a run at 30 if it remains an independent company. It could slip to the 11-12 range initially if the deal fails, as management has threatened investors with a dividend cut--so it can use the cash to fund more CAPEX. And some investors are likely to react to that. But Q1 results from the 10-Q filed with the SEC were very strong, as were 2025 results in the 10-K.

Will this deal fail? I think it's interesting management has pulled the consent solicitation for bondholders at the Indiana and Ohio utilities without attracting sufficient votes. And they'll need to get them.
AvatarRoger Conrad
2:41
I also think it's interesting AES management seems to have gone into hiding from its investors since the announcement--other than to send us the approval form for the merger. Not so much as a press release, let alone a guidance call where they would have to answer questions. That's pretty much unprecedented for a company trying to win approval for a merger. Does is mean this deal is in trouble? That's anyone's guess. But I'm good holding onto this undervalued, quality company to see what happens.
Jerry
2:51
Was surprised by NEE planned purchase of D. Currently own 1000 shares of D and 200 shares of NEE. Would you recommend purchasing more of either one?  Thanks for holding these talks as I always gain good information.
AvatarRoger Conrad
2:51
Thanks for joining us today! Glad you find these chats helpful. We certainly get a lot of ideas from your questions and comments.

I actually raised the buy-in prices for both stocks when the deal was announced--Dominion to 70 or less and NextEra to 90 or less. And there's an opportunity to buy either or both below those prices now.

Whether to do so or not should depend on your portfolio construction--balance and diversification. But these companies meet my most important criteria betting on mergers: I would want to own both of them independently if the deal fails for any reason.

I think this merger has compelling industrial logic--basically pooling resources of two well run companies to meet the demand of 4 of the 5 fastest growing US states--including the global epicenter for data centers in northern Virginia. And I think they will be able to win regulatory approval. These stocks will do better if the merger succeeds. But we should do well even if it doesn't.
JT
2:58
HI Elliott, can you give us your thoughts on the incredible up move in the Nasdaq and S&P 500 in the last 2 months?  With no pulls backs, there is a lot of FOMO (me included).  Many studies suggest this type of incredible thrust up historically have favor higher prices in the months to years to come.  Are you of the same opinion and how are you positioning your portfolios?
AvatarElliott Gue
2:58
Yes, I actually took a closer look at this in a video I did for my Substack publication "Sunday Deep Dive" feature about a month ago: here's a link: https://open.substack.com/pub/freemarketspeculator/p/the-overbought-my...

Basically, the S&P 500 moved from oversold on a 14-day RSI to overbought in record time. It took only 12 trading days, the fastest in at least 33 years. Generally, fast moves from oversold to overbought are consistent with above-average forward returns from the broader market. I think that the natural inclination of most humans (me included) is to think that when something moves up quickly, it must be overvalued but the data says that's not how it has historically worked out -- historically it's bullish, not bearish. I also think back to the 1990s when I first started trading stocks. Back then there was plenty of talk of a bubble, but the market continued to trend higher until it didn't. But, even after the
AvatarElliott Gue
2:59
March 2000 peak, the broader market was trading within 1% of all-time highs in late August, 5 months after the top. Today, the major averages in the US and overseas are hitting all-time highs and 62% of S&P 1500 stocks are above their 200-day simple moving averages. So, my short-to-intermediate term view remains bullish the broader market and I'm not inclined to fight the strong tape without good reason. In my more "general" market portfolios, like the Creating Wealth/Free Market Speculator portfolio, over the past 6 to 9 months we've added some technology exposure, foreign stock exposure and, of course, energy exposure. I am also focused on managing our exposure and remaining disciplined -- taking partial profits on big winners like Flex Ltd (NSDQ: FLEX) (which we recommended last June) and recommending new names like NetApp (NTAP), which we recommended early this month, but is now over our buy under price. I am finding new ideas here and there, but it's important to stay disciplined on entries.
Aaron S.
3:02
I am a subscriber to CUI plus, the Reit sheet, and the Utility sheet and am very happy with the results. My question is what per cent of my portfolio should be in gold ?
 
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