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Augustus

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  • Should Dividend Investors Care About Entry Price? [View article]
    Another way to view the question on valuation is to state it as a Minimum Yield target for purchase. Decide what the dividend growth companies are that you would buy IF the yield was at your threshold or higher.

    Dividend growth rate is not much of a contributor if the initial yield is 1%. Compound a 10% dividend growth rate for 15 years using an initial yield of 1% and look at where the dividend will be. Still not much.

    Compare that with something yielding 6% now and growing at only 5%. The difference is pretty dramatic in final cash flow and accumulated dividends.
    Feb 22, 2012. 02:33 PM | 6 Likes Like |Link to Comment
  • End of the Nuclear Renaissance, the Future of Natural Gas, and the Case for MLPs [View article]
    What you are overlooking in that analysis is that PV and wind are getting a free ride as it relates to reliability and deliverability. Once those sources become significant they will be forced to cover the costs of not being reliable sources. Adding that additional cost into the mix will not leave the wind and PV as such attractive options.

    Sailing ships did not go out of business because the world exhausted the wind supply. It was simply not capable of delivering a reliable service.
    Apr 7, 2011. 12:06 PM | 6 Likes Like |Link to Comment
  • Seven Foreign Telecom Stocks Offering Yields Above 6% [View article]
    I would recommend caution with regard to NZT. They are under a great deal of pressure because of the failure to provide service. There are any number of possibilities that would not be good outcomes for NZT. I have no position in the stock and only looked at it quickly but stopped when I saw the problems. It may simply be a yield trap, or could be the deal of the decade. I just don't see it as the same operating risk situation as DT for example.
    Apr 21, 2010. 09:54 AM | 6 Likes Like |Link to Comment
  • Is This an Economic Recovery? Assessing the Investing Climate in the Years Ahead [View article]
    Greece would never default, IF someone would continue to loan them cash at a low rate. Has Zimbabwe actually defaulted? They just pay in Zim bills with more zeros. The problem is not whether they will print those attractive pieces of paper, it is whether anyone will accept them as payment for anything. On an "internal country US" basis the dollars may be an acceptable medium of exchange for a long time - what else is there? For international purposes it may become relatively worthless, everyone in the whole world has all they want. Loan money based upon USD repayment? Forget about it - just like Zim.
    Apr 4, 2010. 02:17 PM | 6 Likes Like |Link to Comment
  • Dividend Investors Beware: A New Paradigm Shift Is Coming [View article]
    I'm only going to address a bit of the mistatements. The mortgage tax deduction is a very good thing and great public policy. It encourages people to actually own something and develops the idea of proteccting private property rights. The current housing problem has almost nothing to do with the deductibility of mortgage interest, and how you could use that falicy to support an incorrect argument is beyond me to explain.

    The government policy at the root of the housing problem was to push the idea that ALL people would be honorable borrowers and could be expected to play by the rules so that they would repay their debts. It was seen by most analysts as nonsense when first proposed and the critics have been proved correct. Further, you might look to see that only last month FRE decided to quit buying the interest only loans. How did they ever figure that out? Nothing down, never reduce the loan amount, no liability for any losses. What could go wrong? It has nothing to do with the deduction of interest.

    Making loans for modest amounts with low downpayments to help qualified people get onto the first step of the ladder is just fine. 10% down on $2,000,000 home loans is nonsense from the beginning. If the past spending patterns have not allowed them to accumulate more than 10% of the value, they cannot afford it.
    Mar 28, 2010. 02:49 PM | 6 Likes Like |Link to Comment
  • Meredith Whitney: 'I Haven't Been This Bearish in a Year' [View article]
    Calling Bull Ship on this run up 4% early should not be a reason for disparagement. If it moves up to 12,000 then get on her case.


    On Nov 16 10:29 PM hobart_the_dish_guy wrote:

    > Meridith has been bearish for the past 400 points on the Dow. That's
    > fine, but apparently she doesn't quite understand the market forces
    > that have caused/allowed this. While she has been right in the past,
    > so have a lot of other market "guru's".
    Nov 17, 2009. 03:12 PM | 6 Likes Like |Link to Comment
  • Deep Value in American Capital Strategies [View article]
    A Reverse Split will d nothing to alter the problem of Share Price << Book Value. Book value will increase, probably faster than share price, if this one responds in price as most stocks do when they have the reverse split. the only purpose is to attempt to get the price high enough to maintain a listing. With shares priced below $5, there are quite a few funds that cannot buy it.

    If this company is required to do an equity raise now the only outcome is massive dillution, very massive dillution. And it would also indicate that the MtM writedowns were not just "paper losses" but are due to actual imparements in the value of the assets. Otherwise they could just collect the debt and pay down the bank lines. Reducing that debt outstanding would not be a profit or loss generator so the cash should be available for the deleveraging. that would ultimately be more profitable for the existing shareholders than selling new shares at $2 or so.
    Apr 12, 2009. 08:46 AM | 6 Likes Like |Link to Comment
  • Bernie Madoff Comes Out of the Closet [View article]
    It was a pretty well written articl until the author decided that it was "blame it on Reagan" time. If you can find any instance where Reagan advocated "something for nothing" let me know and I's send you a bottle of whiskey. Madoff has been just another crook fleecing the unsuspecting wealthy who did not know how to make money on their own.
    Dec 12, 2008. 09:43 AM | 6 Likes Like |Link to Comment
  • Evaluating Ensco's Dividend Cut [View article]
    Ensco has rigs working offshore for state owned oil companies. These companies have been the cash cows for the governments. Will those governments invest in drilling more wells, even if still profitable, or will they start butchering the cow to sell some meat to be able to continue in office? People may believe they have some idea of how a modest sized shale driller will respond. I don't fault management for not pretending to know how government operatives will respond to a possible reset to lower oil prices for several years or longer.

    Your assessment of the drastic decrease in dividend is probably correct in assuming that management is admitting they do not have a clear picture of near term rig demand. They chose to follow the very safe course of holding on to cash for possible company survival needs. If the storm clouds pass they can send out the cash later.
    Mar 2, 2015. 12:29 AM | 5 Likes Like |Link to Comment
  • Oil & Gas Stocks: Does This Correction Have Logic To It? [View article]
    Those who advocated "Drill, Baby, Drill" as a route to lower energy prices have been proved correct. More oil = Lower prices.
    Those who have claimed that oil prices are controlled by major oil companies have been revealed as idiots. How could the majors let the price decline by 30%?
    Nov 6, 2014. 12:30 AM | 5 Likes Like |Link to Comment
  • Don't Hit The Panic Button On Your MLP Holdings [View article]
    I don't want you to consider this as a criticism of your trade. Different people can look at the same situation and come to different conclusions logically.

    I bought my positions in the MLPs after or during the 2008 / 2009 meltdown in the credit markets. Those were good prices and the yields are unlikely to be available again. Consider that as my admission of bias.

    Now, I have made a few adds to the positions. I have a somewhat dark outlook on the economy, but a positive outlook on the capability of the MLPs to maintain distributions with some growth. I do not really pay much attention to the value of that part of the portfolio, it is all in the stable and increasing distribution. I don't care what the current appraisal is, as long as the rent is increasing.

    I certainly don't know what will happen to MLP prices in a severe market downturn. However, I do expect that they are stable enough to continue to send out a check every three months. And I can keep almost all of it without tax.

    The advice is to consider the current yield on some of the stronger MLP units, consider what you will make with the cash, and allocate a 25% or so portion of your holdings to the MLPs and let it ride for a very long time. Those industries and utilities require delivery services. The MLPs don't have to produce the product or collect from the users. The product in the pipe is collateral for the fees. After you select four or five of the better MLPs that you want to own, consider a 20% pullback from a high as a buying opportunity.
    Dec 13, 2012. 10:06 PM | 5 Likes Like |Link to Comment
  • Don't Hit The Panic Button On Your MLP Holdings [View article]
    In general, the MLP sector got a little ahead on price earlier in the year. Enthusiasm for yields along with the expected growth in NG as a energy source caused prices to get extended on the upside and yields to get too low. Much of that has been corrected out as distributions have increased a bit and this recent selloff from large holder liquidation has pushed prices back to more normal yields. This is not the time to sell unless you really expect the tax regeim to change. Of course, it seems certain that the tax regeim for dividends from Coke and PG will change to higher rates too.

    There is little question that the businesses will continue to operate and with a profit. It is somewhat like owning the powerlines for the electric companies. An increasing population will use larger amounts of power, however it is generated. There will continue to be increasing distributions from the MLP, however they may be treated differently for taxes.

    EPD continues to be well managed with nice growth prospects. It has the best credit rating of all of the MLPs, leading to lower funding costs for expansion. The sector has grown a great deal in the last 20 years, and certainly in the last 5 years. No doubt the reserves are there and will be developed, requiring transportation.

    These partnerships are a bit illiquid for large trades. Any trades of large size will push the price around. IMHO, that is what is going on now in the market and unit price drop. I can be creating buying opportunity.
    Dec 13, 2012. 09:58 AM | 5 Likes Like |Link to Comment
  • The Keynesian Depression [View article]
    Monetary Sovereignty only exists as long as the printed currency is percieved to have value. It is no different than the Beanie Baby craze. Produce them for $0.15 in Asia and trade to the ignorant for $15 in other goods. Now they are not worth the $0.15 production cost. Why do you believe that Zim stopped printing those $100 Trillion currency notes? No one would take them in trade for anything.

    Every Soverign has debased the currency, every one. Your analysis demonstrates your complete ignorance that paper money has no inherent value.
    Dec 5, 2012. 11:53 AM | 5 Likes Like |Link to Comment
  • The Keynesian Depression [View article]
    If you really believe California will ever have a budget surplus, you are easily fooled. The state has at least a 150% proportionate share of US welfare recipients. Requirements for pension funding will consume the state taxes.
    Dec 5, 2012. 04:00 AM | 5 Likes Like |Link to Comment
  • Almost No One Makes Money From The Stock Market Alone [View article]
    Gaucho,
    Your analysis is certainly flawed. Currently it is all of the alternative energy companies which are going broke, even with the massive giveaways from Obama. Only beneficiaries of his policies have been the Chinese whirlygig makers and solar panel polluters. Obama has certainly focused on his pormise to cause low cost coal fired electricity to be eliminated.

    After now finding and confirming that the country has several hundred years of oil and gas reserves, thanks to modern technology and creative energy companies, Obama is using every possible trick in the EPA book to shut that down. You should note that any commodity is always cheaper at the source than a far distant delivered location. It probably costs $3 or $4 to process, liquify, and ship NG to a foreign location. US onshore prices will always be that much cheaper than "world" prices.

    You complain that energy companies "fatten the big oil bottom line" by supplying more energy from a US source and using US employees. Is the only acceptable form of commerce on where a food producer has to deliver your sustinance at a loss, while you expand your waistline and bottom line?
    Oct 26, 2012. 02:34 AM | 5 Likes Like |Link to Comment
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