I sent out a small message to readers today at 8 a.m. ET asking for topics to comment on, and the response has been nothing short of overwhelming -- for a summer Monday at the crack of dawn to inspire well over 50 emails is more than amazing. It is heartening; it says you are finding my work interesting and meaningful. I'm going to answer as many of these as I can, writing maybe a line or two and imploring everyone who sent me an email to buy my book -- it will give so much more added insight than these few lines can -- and it's only five bucks. For those who have read it, however, no more guilt trips -- now the quick and dirty from today's mail:
Scott, Michael, Rich and George asked varying questions about master limited partnerships (MLPs). First, let's be clear: The common "wisdom" is that these infrastructure plays are relatively unaffected by dropping energy prices -- this is wrong. MLPs are by nature disintegrating asset accumulators, and dropping prices inside that environment are at least as destructive as in the producer world. I have put up the red flag inside the MLPs for months, save for a small hold/accumulate on Kinder Morgan (KMI) -- for reasons I've repeated often. As for the next MarkWest (MWE) to be bought, I've never been much good at those types of predictions, even though I've owned MarkWest for years. Its asset base was unique enough to be worthy of the long-haul hold, whether it got bought or not, and very few others are as compelling to me. Take Atlas (ATLS), Breitburn (BBEP), Penn Virginia (PVA) ... no, please, take them. You see what I'm saying....
William, Emmanuel, Russ, Mark and William asked me again about Seadrill (SDRL), my only significant speculative holding in energy right now. I've said it a million times and the trolls don't want to hear it, but offshore is not, and never was going to be, a short-term investment idea with me as some kind of swami picking the absolute bottom. With horrible-looking debt positions and off-cycle indicators that are destined to last at least another year, you're not going to catch this one perfectly. I tell you -- I don't care. There are three companies that own capable three- to five-mile deep-water rigs in the world. Three. The thesis is that the world must at some point circle back to those opportunities. While there will be good money to be made in shale players when that inevitable resurgence of interest in $70, $80 and $90 oil resurfaces, you will be lucky to double your money on those players. With Seadrill, I'm looking for at least a four-bagger. I accumulated at $14, I bought more at $10. If it goes down to $7.50, guess what I'm going to do? Next question. BTW, the other two are Transocean (RIG) and Ensco (ESV).
GKlizax, Neil and Fred wanted my take on majors -- and again, I've been pretty honest about my relative yawning at that opportunity. If you are a fixed-income hoarder and want something in the energy space, by all means own some Total (TOT), my very weak winner inside the major space. No, Conoco (COP) or Chevron (CVX) won't ever hurt you, but I'm trying to find the next great investment in energy -- and these will never be more than bond proxies. Good bond proxies, maybe, but still uninspiring. And what does Shell (RDS.A) have with always throwing money at the Arctic? No, thank you.
John, JudgeC, Jim, STW, David and Sean asked about U.S. E&Ps in various guises. Heck, guys, just buy the book ... it's all there. Who wins, who loses, how long it'll take. Everything.
Finally, only Terry asked about solar. For him it was Trina Solar (TSL). Interesting. Only one. My next book will likely be about the absolute inevitability of solar and the investment landscape after this last eight years of mostly failed initiatives, incentives and foul-ups. But yes, the next big thing is going to be an old one as that industry is finally maturing into a reasonable and investable group -- and I'm not talking about wrapped hype stocks like Solar City (SCTY) or some Chinese runaway.
Thank you all so much for your emails. Please don't hesitate to write me again at any time. I think I'll do this more often, since you seem to enjoy it so much: Dan.firstname.lastname@example.org