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Roger S. Conrad  

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  • Telecom Stocks: Go Big Or Go Home
    Mon, Feb. 9 VZ, S, TMUS 3 Comments

    Summary

    • T and VZ get no respect from investors because of the media's focus on the deep discounts offered by S and TMUS to win market share.
    • T and VZ continue to deliver the goods in their quarterly earnings and likely dominated the FCC's recent spectrum sale.
    • Investors shouldn't expect these names to make a big move as long as the regnant narrative focuses on S and TMUS' aggressive marketing of lower-priced plans.
    • But T and VZ continue to generate huge amounts of free cash flow, pay down debt and execute their long-term growth strategies. And they offer above-average yields.
  • Utility Stocks: Frothy Valuations Signal Opportunity To Take Profits
    Mon, Feb. 2 AEP, SCG, DUK 1 Comment

    Summary

    • In 2014, utility stocks posted their best annual total return since 2000, surprising investors who assumed rising interest rates would hit the sector.
    • I've long favored a buy-and-hold approach. However, at these levels, many utilities are priced to perfection and the risk-reward balance skews to the downside.
    • SCG, for example, trades at a frothy valuation that doesn't price in potential cost overruns at its summer nuclear power plant.
    • By taking profits on big winners, you can book several years' worth of dividends and re-enter these names when they pull back to more reasonable valuations.
  • Lay Of The Land: Gas-Directed Drilling Activity Provides Insight Into U.S. Producers' Response To Lower Oil Prices
    Mon, Jan. 19 BBEP, CMLP, EOG 13 Comments

    Summary

    • Before oil prices tumbled, gas-weighted producers focused drilling activity on areas with the best economics - one of the reasons the Marcellus Shale now accounts for about 20% of gas production.
    • Oil-weighted producers will follow suit, laying down rigs that drill vertically because of the lower initial production rates on these wells and curtailing activity in marginal basins and science projects.
    • Production levels will take longer than expected to fall as operators focus on their highest-quality acreage and slowly work through inventories of drilled but uncompleted wells.
    • Now isn't the time to buy upstream names. Also be wary of gathering-and-processing names in marginal basins or with contracts that entail exposure to NGL prices.
    • Shorting gathering and processing names is dangerous because of likely consolidation and private-equity outfits looking to monetize assets.
  • U.S. REIT Space Short On Bargains But W.P. Carey Looks Attractive
    Editors' Pick • Dec. 19, 2014 WPC 11 Comments

    Summary

    • US real estate investment trusts were cheap in early 2014 when concerns about rising interest rates were at the forefront of many investors' minds.
    • Many US REITs trade at elevated valuations. Names that feature prominently in capitalization-weighted ETFs will trade with more momentum to the upside and downside. We prefer to dig in margins.
    • Of REITs we surveyed, WPC offers best combination of yield and growth.
  • Utility Stocks: Focus On Policy, Not Politics
    Dec. 10, 2014 AQUNF, CMS, D 8 Comments

    Summary

    • Midterm election results imply more gridlock at the federal level.
    • Outcomes of gubernatorial races have important implications for our investments; governors appoint regulators who oversee utilities and set industry rules.
    • We run through the results from the gubernatorial elections and their implications for utilities that operate in each of those states.
  • Navios Maritime Midstream Partners LP: The Straight Story On This Mega-Yielder
    Nov. 26, 2014 NAP 7 Comments

    Summary

    • The minimum quarterly distribution contemplated by NAP's prospectus implies a double-digit dividend yield.
    • We like NAP's visible pipeline of potential asset drop-downs from its parent, NNA.
    • Tanker rates have rallied this fall, a period of seasonal strength. Although tanker market has bottomed from over-ordering during last up-cycle, more scrapping is needed for sustainable improvement in day-rates.
    • We may become more constructive on NAP once we get a better sense of management's strategy and the industry is further along in its self-help efforts.
    • We'll follow NNA CEO Angeliki Frangou's lead and look for day-rates to reach the mid- to high $30,000s for longer periods.
  • Spin Cycle: Expect More MLP And Yieldco Spin-Offs
    Nov. 21, 2014 D, FSLR, NFG Comment!

    Summary

    • Investor demand for securities that offer dividend growth should continue, thanks to the low-yield environment that persists today and perception that this growth element will offset higher interest rates down line.
    • D, NEE and NRG have taken advantage of this environment, spinning off MLPs (DM, NEP) and yieldcos (NYLD) to much fanfare.
    • Parents unlock value by monetizing assets at higher valuations and recycling capital into new growth projects at parent level.
    • NI to get in on the act, splitting midstream natgas assets off as separate C-corp, COLP, and associated MLP CPPL. NFG and SRE contemplating MLPs. FSLR looking at yieldco.
  • Our Analysis Of CONE Midstream Partners LP
       • Nov. 6, 2014 CNNX Comment!

    Summary

    • CNNX cut from similar clothe as EQM and ACMP, two other names that own gathering pipelines in the Marcellus Shale and were closely associated with leading producers at IPO.
    • Much of CNNX's near-term upside will come from organic volume growth, but drop-down element provides a degree of protection if sponsors CNX and NBL scale back development plans.
    • Sponsors need to line up more post-2015 takeaway capacity from Marcellus Shale to improve natgas price realizations and support development plans.
    • A good stock for aggressive investors seeking growth, CNNX could be a worthwhile buy on a pullback. More clarity on CNX and NBL's 2015 development plan could be catalyst.
  • Will The Renewable-Energy Boom Go Bust?
    Oct. 26, 2014 AGLNY, NEE, NRG 5 Comments

    Summary

    • US utilities have developed a great deal of renewable-energy capacity, but the sustainability of this building boom hinges on government support--and politics.
    • Federal tax credits for solar power will expire in 2017 if the government doesn't move to renew these subsidies.
    • Amid these political uncertainties, we prefer utilities that have walked the line, balancing gas- and coal-fired generation with renewable energy.
    • HE could be an interesting short-term play because of the potential for a short squeeze.
  • Water Stocks: Great Promise But At What Cost?
    Editors' Pick • Oct. 19, 2014 AEGN, AWK, AWR 28 Comments

    Summary

    • The US needs to make massive investments in municipal water systems to ensure safe supplies for the communities these serve - a crushing burden to state and local governments - and taxpayers.
    • We prefer system operators to engineering, procurement and construction companies; the latter names have taken a big hit because municipalities have balked on spending.
    • Cash-strapped municipalities increasingly look to monetize their water services, giving well-positioned private operators such as WTR ample opportunity to grow through consolidation.
    • Avoid AWR, CWT, SJW, all of which entail too much regulatory risk.
  • Making Sense Of The Marcellus Shale's Midstream Madness
    Sep. 20, 2014 SEP 9 Comments

    Summary

    • Major midstream operators such as SEP, WPZ, KMP and ETP will have picked most of the low-hanging fruit (pipeline reversals and looping) for natgas takeaway capacity from the Northeast.
    • Project announcements have started to include more greenfield components, which entail greater expense.
    • Midstream names addressing these higher costs by offering equity interests to customers and seeking to capture more of the incremental cash flow by acquiring gathering and processing capacity.
  • Electric Utilities: The American Way Vs. Germany And Australia
    Sep. 2, 2014 AGLNY, EONGY, HE 6 Comments

    Summary

    • Critics of the US solar boom point to soaring electricity costs in Germany as a major risk of subsidies for renewable energy.
    • These sensationalist claims ignore salient differences between the US and European electricity markets.
    • The Australian experience serves as a reminder that the end of US solar subsidies could deal a major blow to some high-flying renewable energy names.
  • Kinder Morgan Inc.'s Mega-Deal: Lower Cost Of Capital And Maximum Optionality
    Aug. 19, 2014 KMI 49 Comments

    Summary

    • KMI's consolidation of EPB, KMP and KMR shouldn't be viewed as a repudiation of the MLP structure.
    • Strategic move aligns with actions taken by BWP - L, ETP - ETE and EEP - ENB to drive distribution growth and lower cost of capital.
    • Consolidation removes IDR burden and maximizes KMI's options. Company can acquire assets that don't generate MLP-qualifying income or spin off assets as smaller, rapidly-growing MLP to further reduce capital costs.
  • NextEra Energy Partners LP: Plenty Of Steak, But Priced For Sizzle
    Aug. 13, 2014 NEP 1 Comment

    Summary

    • NEP IPO well-timed considering investors' appetite for solar power and dividend-paying equities such as MLPs.
    • General partner NEE gives NEP a highly visible source of cash flow and distribution growth by virtue of its extensive renewable-energy assets.
    • We like NEP's business model, but not the valuation. Investors should wait for a pullback or consider BEP.
  • AT&T's Tie-Up With DirecTV Is All About Scale
    May. 21, 2014 T, DTV 6 Comments

    Summary

    • Incremental cash flow from acquisition of DTV gives T more financial firepower in an industry where network investment has differentiated winners from losers.
    • Increased scale gives combined company more leverage in negotiations with content providers.
    • Deal approval faces fewer regulatory hurdles than expected with consolidation within U.S. wireless space.
    • AT&T is a good buy on pullbacks for conservative investors seeking a steady income stream.
  • Exelon Corp. Peps Up With Proposed Acquisition Of Pepco
    May. 5, 2014 EXC 15 Comments

    Summary

    • EXC's takeover offer for POM would ensure that regulated operations cover dividend, improving safety of payout and setting stage for future growth.
    • EXC will spend almost $21 billion on upgrades and expansions to its regulated asset base over next five years, driving dividend growth.
    • Regulatory approval may not face as many roadblocks as some expect.
  • Forget T-Mobile U.S.: Telecom Is Still For Spenders
    Apr. 3, 2014 TMUS 10 Comments

    Summary

    • TMUS's efforts to win subscribers have worsened margin contraction.
    • Questions about stickiness of new subscribers, given importance of network quality.
    • Combination of S and TMUS makes sense, but regulatory hurdles.
    • Telecom industry rewards those who spend on building out their networks.
  • Keystone XL: Investment Opportunities Amid The Controversy
    Editors' Pick • Mar. 5, 2014 TRP 22 Comments

    Summary

    • Approval of Keystone XL won't make or break TRP.
    • TRP has extensive and growing project backlog that should drive growth in coming years.
    • Expect consolidation among smaller E&P companies, which will feel pain if Keystone XL isn't approved.
  • Kinder Morgan Energy Partners: Still Not A House Of Cards
    Feb. 27, 2014 KMP, KMI 116 Comments
  • Separating Turnaround Stories From The Value Traps In The MLP Space
    Feb. 20, 2014 BWP 13 Comments
  • 5 Forecasts For Income Investors
    Jan. 23, 2014 BPL, EPB, LINE 5 Comments
  • Pullback In US REITs Creates Buying Opportunities
    Jan. 3, 2014 MAA 25 Comments
  • High-Yield Telecom Stocks: The Short Sellers' Dilemma
    Dec. 21, 2013 VZ, FTR, WIN 19 Comments
  • M&A Activity Accelerates In The Utility Sector -- Who's Next?
    Dec. 17, 2013 FRTSF, NVE, PNW 1 Comment
  • Do Rooftop Solar And Rising Interest Rates Pose A Credible Threat To Utility Stocks?
    Dec. 13, 2013 SCTY 17 Comments
  • What's Rate Sensitive And What's Not
    Nov. 19, 2013 AMPS, ETR, LINE 4 Comments
  • Challenges And Opportunities In Canada's Oil And Gas Industry
    Nov. 14, 2013 PGH, CVE, PBA 16 Comments
  • My Top 3 Canadian Midstream Stocks
    Oct. 14, 2013 ATGFF, KEYUF, PBA 2 Comments
  • Why I Prefer AT&T To Apple
    Oct. 10, 2013 T 22 Comments
  • Utility Investors Keep An Eye On Washington
    Sep. 25, 2013 AEP, SO, FE 20 Comments
  • Dominion Resources Catches MLP Fever
    Sep. 23, 2013 D 10 Comments
  • Kinder Morgan Energy Partners LP: Not A House Of Cards
    Sep. 16, 2013 KMP 17 Comments