Risk/Reward Vol. 192
THIS IS NOT INVESTMENT OR TAX ADVICE. IT IS A PERSONAL REFLECTION ON INVESTING. RELY ON NOTHING STATED HEREIN.
"I'm falling/I'm falling
Falling in love with you."---lyrics from "Falling" by Roy Orbison
"Pump up the jam/Pump it up
I pump it up/You pump it up."---lyrics from "Pump Up the Jam" by Salt N Pepa
"Let's get together/Yeah, yeah, yeah
Think of all that we can share
Let's get together, everyday
Every way and everywhere."---lyrics from "Let's Get Together" sung by Hailey Mills
A less than encouraging jobs report on Tuesday and the overhang from the shutdown/debt crisis have led many market participants to conclude that the Federal Reserve will not taper quantitative easing until the first quarter of 2014. This conclusion has had a decided impact on the yield from the ever important 10 Year Treasury Bond ("10Year"). In fact, "It's falling/It's falling." And as an income investor, "I'm falling in love" with that fact. The yield on the 10Year fell to 2.50% by week's end which is its lowest close since July. Of course, this also means that the price of the 10Year increased, and since most of my holdings trade in relation to the price of the 10Year, I had a great week. The stock market in general rose as the Dow Jones Industrial Average ended the week up 170 points.
I remain astounded at how news from the oil/natural gas sector is under-reported. I recommend that you subscribe to several of the numerous free publications created and emailed by the U.S. Energy Information Agency (USEIA). Have you read about the Spraberry-Wolfcamp play in Texas, confirmed as the second largest oil field in the world? Are you aware that innovative technology is permitting fracking drillers to more efficiently "Pump up the jam." And believe me, they "pump it up/pump it up/pump it up." This new technology widens the shale fractures. This results in fewer wells, but requires significantly more frac sand in order to keep the wider fractures open. As a consequence, frac sand facilities in Wisconsin are working overtime. Wisconsin, with its abundance of quartz based sand, is the frac sand capital of the world. Indeed in the last three years, 115 frac sand mining operations (that's not a typo, fans) have become operational in our fair state with Eau Claire County serving as ground zero. Three of these operations have gone public. I prefer HiCrush (HCLP) which has risen 56% since I first discussed it back in September, 2012 (see. Vol. 136 www.riskrewardblog.blogspot.com ). The lawsuit that caused me to exit the position has been resolved, and I am back in it. Another new oil patch technology, which addresses the disposal of the watery by product of fracturing, has been developed by GreenHunter Resources. This is a speculative company which I am playing through its preferred stock GHRpC.
As interest rates have moderated over the past month, the values of real estate investment trusts (REIT's) have increased, and none more so than the value of ARCP about which I wrote in Vol. 187, www.riskrewardblog.blogspot.com . Up 12% since that time, ARCP has embarked upon an ambitious acquisition campaign, announcing this week that it's "getting together" via a merger with Cole Real Estate Investments (COLE) to form the nation's largest single tenant REIT. ARCP has "thought of all that it can share" with Cole. By cutting overhead "everyday, everyway and everywhere", the transaction will be accretive immediately. As a consequence, ARCP intends to raise its already impressive dividend to over 7.3% annually (at current prices) which it will continue to pay on a monthly basis. "Yeah, yeah, yeah."
I close by reminding you of the free and valuable information available on the internet. Publications like those from the USEIA discussed above, all public securities filings, various company presentations and the transcipts of earnings calls are just some of the free information available in cyberspace. These are publications for which investors have long been "Crying" and that just a few years ago were available to "Only the Lonely" few who frequented government depositories. If Roy Orbison were alive, he would know that now, instant and ready access is no longer available just "In Dreams". Indeed, "Anything you want/You got it/ Anything you need/You got it/Anything at all/You Got It."
No comments:
Post a Comment