Smarty_Pants

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  • Compelling Bear Market Potential From High Yield MLPs  [View article]
    1/26/16 - A good day for holders of KNOP and GLOP. Both up 5+%.

    And both still yielding ~16%. :-)
    Jan 26, 2016. 04:59 PM | Likes Like |Link to Comment
  • Long Bonds: A Safe Haven In Volatile Markets  [View article]
    Beware the long end of the curve for anything but shorter term positions. While the "flight to quality" meme might hold over the short term, there is a possible risk of repayment in the long term, especially if the US Congress cannot (or will not) stop borrowing to make ends meet.

    If things continue as they have for the past 30 years (US Debt-to-GDP rose from ~30% to ~100%) even the mighty US Bond could lose its safe haven status one day. US GDP growth is dwarfed by the growth of government debt, and likely will be for a long, long time. Those ratios are only going to get worse, especially if a significant recession hits and US GDP stalls or shrinks.

    As for the Chinese selling of US Bonds, they are selling as much to get out from under 'King Dollar' as they are for defending the renminbi. Chinese government Debt-to-GDP stands at ~40% currently. Why would they want to risk their money any more than necessary when it's obvious that the US isn't going to rein in deficit spending any time soon?

    At some point the music will stop and everyone will be looking for a buyer of US debt and there will be few to be found. The Chinese are opting to leave the theater before the performance ends rather than wait for someone to shout "Fire!". Most everyone else is too engrossed in watching the orchestra to realize the potential problems surrounding them or the fact that the exits are too small for the size of the crowd.

    We are already beginning to see the onset of such a problem in the Treasury Bond liquidity measures. Finding a buyer of bonds is becoming more difficult, especially in large quantities. Even the Primary Dealers are having a difficult time dealing with all the risk entailed in such large transactions:

    http://on.ft.com/1nHPwWh

    So Yes, the US Bond will serve as a safe haven, until the day it doesn't. That doesn't mean your suggestions won't work for quite a while, but those who consider following them would be wise to understand the risks they are taking before they jump in. If they are left holding US Debt on the day the music stops, it's not likely they will be able to reach the exit.
    Jan 24, 2016. 01:54 PM | 3 Likes Like |Link to Comment
  • Compelling Bear Market Potential From High Yield MLPs  [View article]
    GLOP and KNOP as well. Both are speciality ship leasing MLPs having every ship on long term leases (5+ years) to major deep water oil (KNOP) and LNG (GLOP) producers. Both have distribution coverage ratios of 1+x and stable or slowly growing revenues.

    KNOP recently announced the next distribution will be unchanged and they have authorized unit buy backs.

    GLOP issued a press release a while back stating that they intend to keep the distribution the same. They should officially announce the next distribution shortly.

    There have been a few articles written on SA about great MLPs being priced at insanely low levels. If you can stomach the price volatility for the next few years, the well run MLP units should pay off handsomely.

    I am long GLOP and KNOP (obviously). ;-)
    Jan 22, 2016. 07:21 PM | 1 Like Like |Link to Comment
  • Tanker Stocks Hit Analyst Iceberg  [View article]
    "I'm thinking it might be a good year to go to the Quebec Winter Carnival and stretch my USDs." - Gtoz

    I went to the Winter Ice Carnival several consecutive years back in the early '80s and enjoyed it immensely. Roughly a dozen college students split 4 rooms at the Lord Elgin Hotel, right across the street from Confederation Park and a short walk to the Canal. There a set of steps led down to benches where you could change into your skates and then spend the afternoon skating up and down the city. Quebec is such a beautiful place too.
    Jan 15, 2016. 10:45 PM | 3 Likes Like |Link to Comment
  • Tanker Stocks Hit Analyst Iceberg  [View article]
    KNOP distribution held constant at $0.52, payable in mid-February.
    Jan 15, 2016. 10:26 PM | 1 Like Like |Link to Comment
  • Tanker Stocks Hit Analyst Iceberg  [View article]
    "I think we have to trust John Costain that these [shuttle] contracts would not be violated." - Chris Damas

    That's my understanding. Once the oil/LNG is in the tanker, the owner of the ship has a well established legal precedent which allows him to withhold delivery until payment is received. Even in a restructuring Bankruptcy the owner of the cargo will need to have it delivered in order to generate revenue, so payment to the tanker is nearly a certainty.

    Read through the plans to weather the low oil price environment for the oil majors. They never stop producing from operating wells to save money. The cuts always occur in exploration, labor, and plans for future drilling capex. Once the money is spent on a producing platform, it continues to produce for as long as it lasts. Stopping production reduces revenues, which doesn't help improve profitability at all. They need to generate as much revenue as they possibly can.

    The "worst case scenario" for breaking those contracts would be a BK with full liquidation, and that's not likely any time soon.
    Jan 15, 2016. 08:07 AM | 3 Likes Like |Link to Comment
  • Tanker Stocks Hit Analyst Iceberg  [View article]
    "Of course TipRanks will put that I am recommending to buy Citigroup in this article and am down." - Chris Damas

    Maybe you should consider applying for an analyst's job at Barron's, where you don't need to have any actual facts to back up your written opinions. The Barron's prestige alone would be likely to improve your TipRanks rating.

    With those kind of accolades under your belt, you wouldn't need to write articles about tanker stocks (KNOP) trading at nearly half their book value, yielding nearly 20% on 1+x distribution coverage, and with stable revenue for the next several years.

    Still, some of us appreciate your effort to bring a bit of sanity to the chaos by pointing out the opportunities. How can Barron's compete with that? :-)
    Jan 13, 2016. 03:29 PM | 3 Likes Like |Link to Comment
  • Tanker Stocks Hit Analyst Iceberg  [View article]
    JP Morgan ..., Citi ..., and Barclays issued the downgrades. I suppose they ought to know, if not for largess from the FED and backing from the taxpayers in 2008 those institutions would likely be long past bankrupt themselves.

    In reality, the shuttle and tanker MLPs I've researched look like they should have no problems for the next several years in generating sufficient cash flow for distributions, debt pay down, and possibly share buy backs at these absurdly low prices. Most have borrowing costs that other businesses can only dream about due to their relationships with their drop down 'parents'.

    As for worries over breaking contracts, the oil shuttles are 100% necessary to move oil from deep water wells to shore. Their customers have no other option if they wish to continue pumping oil and generating revenue. After sinking multi-billions into developing the deep water platforms, they will. The LNG carriers are facing increasing demand over the next several years and may in fact develop a shortage if new builds are delayed.

    Can't wait for my next quarterly distribution so I can add even more shares at current price levels. When prices rebound to more sane levels I'll be glad I did.

    Long GLOP and KNOP.
    Jan 12, 2016. 06:30 PM | 5 Likes Like |Link to Comment
  • Dividend Growth Portfolio - 2015 Was A Good Year With Bad News At The End  [View article]
    I find it interesting to see your Total Return pulling ahead of SPY again after a brief period where the market had managed to gain the lead by a nose.

    DG Portfolio: ~7.81% CAGR

    SPY: ~7.41% CAGR

    Keep up the good work. You're proving the DG nay-sayers wrong one quarter at a time. After 7.5 years it gets that much harder to claim it's a lucky coincidence.
    Jan 6, 2016. 08:01 AM | 4 Likes Like |Link to Comment
  • 2016 Prognostications  [View article]
    "now that Tim Horton's has US ownership, you might see a Tim's in your neck of the woods eventually!" - Faye

    Not likely very soon. I live a good ways south of the Mason-Dixon Line. The nearest Timmies is a 12 hour drive, in good weather. For now I have to make do with mail order. If I buy in large enough quantities the extra cost of postage is bearable.
    Jan 4, 2016. 10:10 PM | Likes Like |Link to Comment
  • 2016 Prognostications  [View article]
    I agree, the downside chaos in the energy sector is an opportunity to buy shares in solid, profitable businesses at bargain prices, for those with sufficient nerve, and patience, to do so. Those purchases will provide portfolio out-performance in the long run.

    And, as long as I can continue to get my Timmies ground coffee shipped to me in the States 2016 will likely be tolerable. ;-)
    Jan 4, 2016. 08:02 AM | 1 Like Like |Link to Comment
  • Q4 Portfolio Review  [View article]
    "I was thinking that I may be better off with a US MLP since they have been hammered." - TimmiesRegular

    If you determine that an MLP would suit your needs better, I can suggest two for further due diligence. They both provide long term tanker leasing in the energy space. Both businesses are solid financially and their prices have been beaten down so far in sympathy with oil and natural gas that they are currently yielding in the low teens.

    GLOP: Liquid Natural Gas tanker leasing, US based, 13.4% yield.
    http://www.gaslogmlp.com

    KNOP: Deep water shuttle tanker leasing, UK based, 15.4% yield.
    http://bit.ly/1OoS7OD

    I've tried my best to find "what's wrong" with these two companies and have only found more good things as a result.

    Be prepared for volatile price swings though. Mr. Market is off is meds in this sector of the market, so it might not be what you're looking for in that regard.
    Jan 1, 2016. 11:56 AM | Likes Like |Link to Comment
  • Q4 Portfolio Review  [View article]
    "This is the first quarter the portfolio's income is appreciably more than our regular quarterly expenses. Actually, the option income alone basically covered our regular expenses ..., but I do not yet know if that is repeatable on a quarterly basis." - Faye

    That's great Faye! Looks like you've found a "second career", kinda. Having been laid off a time or two in the past, I know first hand how soothing it is to have a 'backup plan' for paying the bills in case one's main source of income is reduced. If nothing else, you now have a larger set of choices which suffice.

    I look forward to reading about your call selling exploits in the near future. It will be somewhat different, but I'm confident you'll figure it out after a short while.
    Jan 1, 2016. 11:44 AM | Likes Like |Link to Comment
  • Using Monthly $50 Direct Purchases To Create The Early Retirement Portfolio  [View article]
    Look into what the IRS calls Rule 72(t) payments, or SEPP (substantially equal period payments):

    The [penalty free] substantially equal period payments must generally continue for at least five full years, or if later, until age 59 ½.

    There's quite a bit of information on the web, if you go looking.

    http://1.usa.gov/1J6qKIK
    Dec 24, 2015. 07:59 AM | 2 Likes Like |Link to Comment
  • GasLog, Golar LNG plunge amid Teekay dividend cuts  [View news story]
    " the market gave very little credit to GLOP for their dividend policy confirmation today. In my mind this shows that they are still lumping the company (and most of its peers) in the segment driven by the oil price. Until that link is broken, the share prices of the marine shippers will not recover." - LNG novice

    And by "not recover" I presume you mean to say "present an outstanding opportunity". :-)

    Personally I hope the current prices last until after the next distribution so I can add shares at a crazy-good value.
    Dec 23, 2015. 08:05 AM | 1 Like Like |Link to Comment
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