ARLP

Covering Oil Markets Ahead of the Upcoming OPEC/OPEC+ Meetings

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Image Source: Exxon Mobil Corporation – 2019 IR Presentation  By Callum Turcan On March 5, the Organization of Petroleum Exporting Countries (‘OPEC’) is holding an “extraordinary” meeting in Vienna, Austria (EWO), which will be followed up by a ministerial meeting between OPEC and non-OPEC members the next day. The group had already agreed to cut oil (USO, BNO) supplies by an additional 0.5 million barrels of per day (‘bpd’) back in December 2019 through an agreement that would last through March 2020 (that was on top of an existing deal to keep 1.2 million bpd off of the market which runs through the end of March 2020 as well). As part of that deal, Saudi Arabia (KSA) offered to “voluntarily” … Read more

Fed Cuts 50 Basis Points, Expect More Market Volatility Ahead

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Image Source: FOMC  The emergency 50-basis point Fed rate cut announced March 3 was largely expected by the marketplace in light of growing economic concerns due to COVID-19, but it does nothing to immunize against COVID-19 and little to stabilize the situation. We continue to monitor the situation closely, and we expect ongoing volatility in the coming days and months as the situation with COVID-19 remains fluid. Having moved to defensive positions in both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio in January and having capitalized on the “crash protection” put, we are preparing for our next move. For now, we’re watching and waiting, and we encourage readers that have not yet picked up their copy of … Read more

COVID-19 Crisis Intensifies

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Image Source: CDC. Coronavirus Disease 2019 (COVID-19).  Our dearest members: — The world is being challenged today by what some including Bill Gates believe might be a “once-in-a-century pathogen.” We do not know the eventual outcome, whether the impact of this illness ends up being as profound as the Spanish Influenza of 1918-1919 (which inflicted a death toll in the tens of millions), but we maintain our view the markets have yet to come to grips with the impact of COVID-19 on economic activity and potential ramifications on the global economy and the banking system.  — What is currently a “biological” crisis may turn into an all-out global financial crisis, one that could end up worse than the 2008/2009 mortgage meltdown. Instead … Read more

Has the Stock Market Crash Begun?

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Image: CDC. Transmission electron microscopic image of an isolate from the first U.S. case of COVID-19, formerly known as 2019-nCoV. The spherical viral particles, colorized blue, contain cross-section through the viral genome, seen as black dots. Dear members: This article is our fourth update on COVID-19. The previous three installments can be found here (Feb 22), here (Feb 7) and here (Jan 31). We trust you and yours are well during this global crisis. It’s hard to turn on the television these days without hearing about COVID-19, a novel coronavirus and respiratory illness that continues to spread from person to person around the world. COVID-19 is deadly, and particularly deadly among those 60 years of age and older and those … Read more

ALERT: Adding Market Crash ‘Protection,’ Removing MSFT, BKNG

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Image source: Centers for Disease Control and Prevention.  ALERT: Adding Market Crash ‘Protection,’ Removing MSFT, BKNG — Changes to newsletter portfolios — We’re adding out-of-the-money put options to both the Dividend Growth Newsletter portfolio and Best Ideas Newsletter portfolio. — We’re removing Microsoft from the Dividend Growth Newsletter portfolio. — We’re removing Booking Holdings from the Best Ideas Newsletter portfolio. — By Brian Nelson, CFA — We’re making some moves in the newsletter portfolios today.  — The Dow Jones Industrial Average (DIA) is currently indicated down 900+ points in pre-market trading during the session Monday, February 24. We laid out a thesis where the US markets could experience a “crash,” and we encourage you to read that take here, “Is a … Read more

Is a Stock Market Crash Coming? — Coronavirus Update and P/E Ratios

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Image Source: World Health Organization, Coronavirus disease 2019 (COVID-19), Situation Report — 32 We don’t think this is the environment to put new capital to work, and we remain highly cautious of what COVID-19 means for global economic growth not just in the first quarter of 2020 but for the rest of this year (maybe longer). Right now, the US markets are not really factoring in anything related to COVID-19, and perhaps may be adjusting to China’s stimulus in artificially propping up the markets as if the outbreak is somehow a “positive thing.” With the S&P 500 trading at 19.0 forward earnings estimates–estimates that are likely too high given the evidence we are seeing with respect to a slowdown due … Read more

GasLog MLP Family Highlights Problems with Flawed Model

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Image Source: GasLog Ltd – 2018 Analyst Day Presentation By Callum Turcan We’ve written about it many times in the past and we’re writing about it again: the master limited partnership (‘MLP’) model is fundamentally broken. Equity holders in this arrangement have little to no say over how the family of companies are run, and management is often beholden to no one. Only by converting to a C-Corp can this arrangement be rectified. Massive Payout Cut As you can see in the graphic below, the ownership structure of GasLog Ltd (GLOG), the general partner (‘GP’), and GasLog Partners LP (GLOP), the limited partner (‘LP’), is quite convoluted. This MLP family leases own vessels that transport liquified natural gas (‘LNG’) and … Read more

The Great Guyanese Oil Boom

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Image Shown: A drill ship floating in open waters. Image Source: Exxon Mobil Corporation – 2019 IR Presentation By Callum Turcan We’re going to get into the potential opportunity for energy producers in Guyana, but first, one thing that often gets lost in the noise surrounding press releases and presentations announcing new upstream projects coming online is that Exxon Mobil Corp (XOM) and its peers are contending with serious base decline rates. Decline rates are around 3-5% per year for conventional fields depending on the level of investment made in base maintenance (along with recovery rates and the quality of the rock), which includes such things as gas/water injection projects (this entails drilling injection wells to maintain reservoir pressure and often involves … Read more

Resetting Your Mental Model

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Image Source: affen ajlfe A version of this article was originally published on our website October 6, 2013. Having the right mental model and using the right information can be the reason why you win or lose in investing. “What is the definition of timeliness? Many believe it is getting information to investors as quickly as possible after an event, or updating something every single day or week for immaterial information. I believe in a different definition of timeliness. I believe timeliness is using all information available in a mosaic approach to accurately predict the event before it even happens. Take Kinder Morgan as the latest example. We were the only ones predicting what was going to happen before it did. To investors, … Read more

Our Reports on Stocks in the Industrial Minerals Industry

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Image Source: Alliance Resource Partners Structure of the Industrial Minerals Industry The volatile industrial minerals space contains firms that primarily focus on coal mining. The profitability of constituents largely depends on coal prices, which are tied to factors beyond their control–such as the price of alternatives (natural gas), the demand for electricity/steel, and the strength of the global economy. Customers typically have bargaining power under customary long-term supply agreements and can terminate contracts under certain scenarios (e.g. a spike in transportation costs). Regulations and organized labor add further uncertainty to operations. We don’t like the structure of the group. We’ve dropped coverage of stocks in the Industrial Minerals space: ARLP, CCJ, CNX, HCR, NRP.