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Ray Merola  

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  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    Pretty tight lid on the timing, James84

    But I like your style. Let's see how it all pans out.
    Jul 2, 2015. 12:58 AM | 1 Like Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    UncleE

    I have been slowing buying in small increments every 4-5% down or so. While I have no insight on it, I suspect at $54 we will see a bottom. That's a ~7% yield on a stock that hasn't cut the cash dividend since 1945.
    Jul 1, 2015. 05:57 PM | 2 Likes Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    Thank you for the kind words, warno1

    55 years....I guess that makes you a long-term investor, huh? Impressive.
    Jul 1, 2015. 05:55 PM | Likes Like |Link to Comment
  • Do Not Buy Annaly Capital, Yet [View article]
    Thank you wdchil

    mREITs were never "safe money." This has been washing out weak hands for a long time. If rates move rapidly, it's difficult for mREIT management to adjust.

    Did you note that Annaly appears to be making a much bigger push towards commercial property? Notice who's been hired recently. Commercial REITs have more exposure to credit risk; however, less interest rate risk.

    If the dividend remains comparable, an investor doubles the investment in 6 years by reinvesting. Since 2013, the reinvestment has generally been at lower prices than that time. Even someone who purchased all their shares at the very worst time all-in ~$17; would see their cost basis reduced to as low as ~$13.50 or so in that time.

    Everyone did not invest all-in at $17.
    Jul 1, 2015. 05:53 PM | 2 Likes Like |Link to Comment
  • Do Not Buy Annaly Capital, Yet [View article]
    Can't argue with your logic, RS

    My view is that when the Fed tightens (and I use this term loosely as we're talking about a nudge above ZIRP), long rates will rise more: a typical yield curve. Since I see little reason to believe we are heading for a recession, a flat curve seems unlikely. Even if so then the Fed will, if we take Janet Yellen at her word, hold down rates. The Fed, especially with an election year coming up, doesn't need to get in the middle of politics by exchanging a hobbling economy for a DoA one.....that can be blamed on its policies.

    A regular yield curve should widen NIMs, and therefore mREITs should generate more income; thereby permitting the dividend to stay pat. However, the same set of circumstances are likely to pressure book value, as existing securities will lose value as rates go up. Leverage and derivatives can mitigate, but not prevent this.

    Therefore, I envision NLY retaining the dividend but seeing book value under pressure. 29% worth of pressure? I doubt it.

    I might not invest in Annaly here: your thesis. As an existing shareholder, I plan to reinvest the dividend and let the chip fall where they may.

    In 2013, my NLY investment thesis was to pretend the stock exchange was closed for 5 years; talk with me again in 2018......

    Despite the rough ride, I cannot find concrete enough reasons to abandon that thesis. Lots of question marks, but no exclamation points.
    Jul 1, 2015. 03:01 PM | 18 Likes Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    Thanks C_I

    I have owned Shell shares for decades; sometimes a few, sometimes more. Overall, the investment is no blockbuster, but a fine bond equivalent. Buy at low ebb, and one picks up some capital gains to boot.

    Management has been uninspiring for some time. Voser seemed to be running for cash, a good thing, but lack of capital discipline undid him. Now comes Van Beurden talking about "Balancing Growth and Returns." I'm willing to give him a chance to produce results; and with the dividend yield ~6.5%, it's easy to watch and wait a bit.
    Jul 1, 2015. 02:10 PM | 3 Likes Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    Thank you, DividendGuy23

    I like Chevron, ExxonMobil and Shell. Chevron has a fine, long-term performance track record, management is sound, and the company tends to stay out of the limelight. My view is ExxonMobil is the Super Major standard-bearer. Whenever the ttm P/E is 9x or less: I buy it.

    However, right now I like Shell more on valuation and dividend. Chevron below $100 seems like a good investment, too.
    Jul 1, 2015. 02:06 PM | Likes Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part III [View article]
    R Phillips

    Thank you for the kind words.

    I believe an Energy Transfer / Williams partnership makes a lot of sense. Great deal. However, I'd really like to see the dust settle awhile if that transaction gets done. ETE is a great MLP, the GP interests allow it to print money.

    However, the number of deals and frequency thereof has been a bit breathtaking.
    Jul 1, 2015. 01:45 PM | 1 Like Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    retired358

    We both know the history of these shares. Yes, it has been disappointing. Shell senior management has often appeared to all but forget shareholder returns, insisting upon fighting other battles. It's an oversight that may be related to the Company's European roots, old board structure, or both. I really don't know.

    I'm willing to let Van Beurden have a go of it to see if his "Balancing Growth and Returns" is an accurate mantra, or just hot air. When the dividend yield is over 6%, I like to accumulate some additional shares, since over time, the tendency is for the yield to be below that mark.

    A good yield, a few points over time; and just maybe a CEO with a sustained focus upon capital and shareholder returns.
    Jul 1, 2015. 01:08 PM | 2 Likes Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    Thank you for pointing out that link, Mercy.

    In addition, the Royal Dutch Shell website offers good insight, too. Recommend reviewing in detail the specifics.

    In short, A share stockholders will see 15% Dutch withholding tax on dividends. B shares do not. Many U.S. taxpayers can recover the tax by filing for a credit. U.S. tax-deferred accounts may wish to avoid A shares. The BG Group deal will dilute B shares.
    Jul 1, 2015. 01:00 PM | 3 Likes Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    jrc50

    There's been a lot of discussion about the dividend. We all realize the dividend isn't guaranteed. However, CEO Van Beurden would not want his legacy to be the dividend was cut the first time in 80 years while on his watch.

    I submit, as an adjunct to this article, the recent decline in energy prices alone would not have jeopardized the payout. Some analysts believe the BG Group deal will do that.

    My view is since the acquisition is "internal driven" versus an external force, Shell management will not risk the dividend over a clear internal (and optional) decision. No one was threatening RDS if they didn't do the BG Group transaction.

    I suspect they have seen clear to maintain the payout even beyond 2016: the year management went on record to state the current dividend is safe.
    Jul 1, 2015. 10:35 AM | 7 Likes Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    Believe you've got a good idea, smurf

    Of late, RDS price action has been abysmal. A confluence of events are all dragging down the shares: low energy prices, concern over the BG deal, Greece fears, and a general malaise on the EU exchanges.

    I agree Van Beurden may be the catalyst that triggers some expense discipline and capital controls that has been missing.

    Let's stay tuned.
    Jul 1, 2015. 10:14 AM | 3 Likes Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    Thanks long

    I believe we will need to be patient with this one. I'm not expecting any snapback rebound. Shell shares are tied closely to the EU exchanges and I suspect trouble there for awhile.

    However, in the long run I believe things will be alright. My expectation is share prices will rise to ~$65 Fair Value within a year or two. The dividend appears safe.
    Jul 1, 2015. 10:11 AM | 4 Likes Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    Indeed, AllinFundamentals

    Shell stock traded in the mid-$30s during the 2008-09 crisis. The yield was 7.5%. It's possible shares could go that low, but sans a major crisis or energy falling to 2008-type lows; I suspect it's unlikely. At $45, RDS shares would yield 8.4%.
    Jul 1, 2015. 10:09 AM | 3 Likes Like |Link to Comment
  • Wading Into The Oil Patch? Focus On The Balance Sheet - Part IV [View article]
    sabex

    How are you so sure there will be a spill?

    Indeed, if multiple drillers explore the Arctic for years, there will be a mishap eventually.

    However, I see no reason, as part of a current investment premise, to believe that Shell will have a spill anymore than any oil company could have a major accident anywhere at anytime.
    Jul 1, 2015. 10:07 AM | 3 Likes Like |Link to Comment
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