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dunwoody_joe

dunwoody_joe
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  • Kinder Morgan, Inc. to Purchase KMP, KMR and EPB; 2015 KMI Dividend to Increase to $2 per Share [View article]
    Over the next year (as the dust settles on this transaction), I expect KMI to trade around a yield of 4% giving it a share price of $50. If indeed it can grow the dividend at an annual rate of 10% that should bring the per share price of KMI up to about $60ish in 2017--when the warrants are due.

    That puts the warrant value at $20 around exercise time--or a 694% return. Have to expect some dilutive effect of the warrants (although I expect continued buyback).

    I know this sounds crazy but...
    Aug 10 10:55 PM | Likes Like |Link to Comment
  • The Linn Energy 2-Step: Reinvest, Then Stop Reinvesting [View article]
    GeorgeH--I like your style!

    I have the same approach with some of the same companies, and I really believe it offers a better way. Traditional DRIP investing is simple enough but I have found that I much prefer taking dividends and distributions in cash to redeploy into the portfolio as I wish. It is less mechanical and depends upon my constant analysis of relative risk/reward across many instruments. But I do that anyway.

    I think of my approach as "Balanced Portfolio-Based Reinvesting with an Income Bias"

    1. Select a handful of companies across a few sectors that have high distributions/dividends into a tax-advantaged portfolio;
    2. Collect those distributions in cash;
    3. Add to the cash by selling out-of-the money call options on those that are fairly to overvalued based upon your favorite metrics;
    4. Scan the portfolio for the best instrument (based on tech and value) to reinvest the growing cash--when I believe the timing is optimal;
    5. Sprinkle in some smaller, growth companies when prudent to "spice up" the return;
    6. Prune the underperformers, add to the strength, add new positions that offer potential, but keep some sector diversification.
    7. Watch some metrics: I like to keep the portfolio's annual cash generation growing at least 2x the annual inflation rate AND the portfolio's value at the S&P 500 growth rate. I usually do much better than that.
    8. Wash, rinse and repeat...over 30 years!

    Of course, like any recipe, "season to your own taste" but keep it simple.

    DJ

    PS: Since we share many of the same companies, I'll add that in addition to those mentioned in your article, I hold and like: MWE, SDRL, KMI, KMR, ETE, VTR, WFC, WPC
    Jul 30 07:51 AM | 1 Like Like |Link to Comment
  • Kinder Morgan Warrants Aren't Trash For Shareholders [View article]
    I own both KMI and KMI warrants so I think both are fine. but they are two different animals. KMI appreciation and dividend will likely do just fine. But if KMI does "just fine" then the KMI warrants will give a turbocharged return.

    Case in point: I bought KMI and KMI warrants around the same time in March. My KMI basis is $32.10 and my KMIWS basis is $1.78.

    As of right now, my total return on KMI is 6.74% and KMIWS is 30.11%.

    I love turbocharged on the way up...not so much on the way down. But right now the asymmetry on the warrant is welcome.
    May 22 02:45 PM | 1 Like Like |Link to Comment
  • Kinder Morgan Warrants Aren't Trash For Shareholders [View article]
    So as a holder of both warrants and underlying KMI, I try to follow Richard Kinder's lead in deciding how to handle my investments. I must assume the following:

    1. Kinder believes there is a high probability that KMI stock will trade above the $40 strike price on May 25, 2017. I assume this because he is using cash today to purchase warrants that are still a fair bit out of the money. Presently down to 317 Million warrants from over 500 Million, tells me that Kinder believe that the most productive use of KMI cash today is the retirement of cheap warrants.

    2. In fact, given the debt position of the KM enterprises, and their WACC, I could probably calculate what RK thinks is the probability that the warrants will reach the $40 threshold in three years.

    3. Richard Kinder himself owns a ton of KMI shares and has openly declared that he believes it is a great investment--and he continues to add to his stake. RK is a very smart guy and as a KMI and KMI warrant holder, my interests are directly aligned with RK's interest. I like that.

    So, as long as they continue to purchase warrants in the open market, then I have to assume that they are attractive and I will hold mine. I expect another 20-25 M warrants to be repurchased over the next quarter and an announcement of a reloading of the warrant repurchase plan. Take out 25M per quarter over 3 years voila--almost all gone.

    I expect that over the next 2 years that the warrants will return 3-4 times what KMI returns. After that, I'll re-evaluate.

    Finally, I agree that in the end, the warrants will not be too dilutive--either because there won't be any left in the marketplace, or the price of KMI is not much above $40. I hope for the former.

    May 8 07:48 AM | 9 Likes Like |Link to Comment
  • The Most Intriguing Thing About Bank Of America's Dividend Hike [View article]
    "Quibbling over a penny or two in the dividend seems more like posturing rather than concern about whether Bank of America can actually afford it."

    True enough! The Government wants to exercise its control over BAC for the benefit of Wall Street and Main Street. Mostly theatrics but little anyone can do.

    Over time, BAC will find it's natural course unaffected by the heavy hand of the government. And it will be upward. Long BAC stock and BAC warrants--but it seems to me that the A warrants are a screaming buy.
    Mar 27 06:52 PM | 3 Likes Like |Link to Comment
  • Bank Of America: Go Home, Goldman Sachs, You're Drunk [View article]
    I think it would be very interesting if the SEC made a rule that once a brokerage made a downgrade of a company stock, they were barred from buying for some period (say 3-6 months) including trading the derivatives.

    Or the opposite (barred from selling for 3-6 months after an upgrade).

    Seems like that might snuff out some of chicanery and inject some investor confidence in the system--all at the same time!
    Mar 24 11:47 AM | 6 Likes Like |Link to Comment
  • Bank Of America: Go Home, Goldman Sachs, You're Drunk [View article]
    There are a lot of ways to make money in the market. There is the "old fashion way" and then there is the "Goldman way".

    This is classic Goldman: 1. Insert doubt to shake the bushes; 2. Pick up shares at the expense of their clients (the "Muppets") and others; 3. When satisfied, reverse the call, watch the shares move higher and sell the shares back to the Muppets. 4. Wash, rinse, repeat!

    There is an antidote: Do the opposite!

    See y'all at 20.
    Mar 24 08:13 AM | 11 Likes Like |Link to Comment
  • HTA's Recipe For Healthy Returns - Strong Operating Fundamentals Plus A Buying Opportunity [View article]
    So, if I am a holder of class B shares that convert after the market close on November 7, I have a couple of realistic options:

    1. Sell my shares on the open market on 11/8 and thereafter, incurring probable tax liability in 2013. I may do this if I need the money, have some carry forward losses to cover my capital gains or think that shares will be under greater pressure later on.
    2. Hold my shares until January 2014 and then sell, thereby pushing off the tax due into next year. I'd do this if I am focused on my tax burden and think that waiting will not adversely impact my total take. I also would then qualify for the next dividend payment.
    3. Hold my shares long term, pocket my dividends and ride HTA into the future.

    So, I'll guess that a fair number of class B holders will start selling in January to take advantage of #2, although some will sell right away (option #1). So my expectation is that selling volume picks up on Friday driving the price downward . I expect that the price will stabilize through year's end, and then selling pressure will intensify in early January.

    I'm waiting until January to add more HTA shares.
    Nov 6 04:59 PM | 1 Like Like |Link to Comment
  • My 80 Year Prediction On 3D Printing And Robotics [View article]
    Great comments Frastick, I agree wholeheartedly. One thing I know for certain about 80 years from today--I won't be around!

    As for the medical applications of 3-D printing, to my mind, it is the ideal place for additive technology. Customized, just-in-time replacement parts made locally of titanium or an exotic alloy (stronger and lighter) seems logical. Cheaper, faster, better.That is what attracted me to Arcam AB.

    Have you looked at Arcam AB? Love to hear your thoughts.
    Oct 17 03:15 PM | Likes Like |Link to Comment
  • My 80 Year Prediction On 3D Printing And Robotics [View article]
    Nice review on the potential growth path of 3-D printing industry, I completely agree with your projections and trajectory.

    However, I think you missed the best company of all--Arcam AB (AMAVF). A Swedish company with a patent moat, that is growing top line revenue fast, cash flow positive, carries no debt, with a stable of Fortune 500 customers (like Boeing, GE, etc), plenty of independent research on the technology, focused and conservatively managed, and is MAKING MONEY NOW! Plus, nice earnings growth expected to be announced next week. Have you looked at Arcam AB?
    Oct 10 07:11 AM | 9 Likes Like |Link to Comment
  • ExOne And Arcam: A Fundamental Tale Of 2 3-D Printing Companies [View article]
    Nice article, thanks.

    Do a Google Scholar literature search on Arcam AB and you will be impressed with the depth and breadth of papers involving the Arcam systems from some of the leading material research engineers in the world. Frankly, it's stunning.

    Arcam has the science, and is catching the 3D printing wave at just the right time. Plus, they are running their business well. It is very unusual to find all three aspects together at this stage of a company's development.

    Arcam is still under-followed in the US, for now. But that will change soon.
    Aug 7 02:30 AM | 3 Likes Like |Link to Comment
  • Arcam AB: Small 3-D Printing Company With Big Growth Projections [View article]
    Slow, steady and reliable...the Swedish way!

    If Arcam AB was an America company list on one of the major exchanges, it would be all the rage with a market cap at least 3x its present size. If one does a Google Scholar search of "Arcam AB" you can see the depth of the research utilizing Arcam printers--all with impressive results. The shift over to the business side--4 Million shares, positive earnings, backlog of orders, in the industry sweet spot of a growing technology.

    Nice article, thanks. But the word will soon be out on Arcam AB. If they can ward off the suitors, they'll be huge!
    Jul 23 05:15 PM | 3 Likes Like |Link to Comment
  • Commodities Today: Devon's Attempt To Create Shareholder Value [View article]
    Whether the market likes it or not, spinning off an MLP is a value- adding maneuver for DVN. I expect that DVN will be monetizing certain assets by dropping them down into this tax-efficient MLP at favorable terms. In essence, creating a new balance sheet and a secondary access point to the capital markets.

    Not flashy, nor first...but likely value creating.
    Jun 8 06:19 AM | Likes Like |Link to Comment
  • Kinder Morgan Management: A Cheaper Way To Own Kinder Morgan Partners [View article]
    I long ago made the choice to stay with KMR (and more recently KMI too) over KMP for a number of reasons outlined elsewhere. It has worked out fabulously for me and I doubt if any relative change in the discount with KMP would change my mind. So no, I don't think KMP would be a more attractive choice if it was mildly discounted to KMR (plus I don't see that switch happening). But for the right amount of discount, I would have to reassess!

    My comments above are more about observing what appears to be a fairly regular (and becoming predictable) pattern with KMR around ex-dividend time. This is not about the relative difference between KMR/KMP at all, but rather how to play KMR over the course of 2-3 weeks, repeatable 4 times/year to squeeze out some extra alpha with little risk. I think that can be done with option strategies.

    Perhaps the opportunity will go away soon, or be arbitraged away, but for now it seems that there might be some money to be made playing the pattern. This particular quarterly "observation" is has not fully run its course yet, but it is looking like it may hold again, which will be 8 out of the last 10 quarters.

    DJ
    Apr 26 11:40 AM | Likes Like |Link to Comment
  • Why Just About Everything Most Investors Do Is Wrong [View article]
    I sure did read the article Dave, but it seems you need your morning coffee (or maybe a little less).

    50 years ago KO, MCD, WMT, PG were all a little less mature than they are today. Of course I can choose those and put them away, and my heirs will do fine. But I was simply asking whether people have candidates that are a bit earlier in their growth paths than the fully mature ones you suggest.

    But thanks for the lesson!
    Apr 26 08:34 AM | 1 Like Like |Link to Comment
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