I like Oil

papadad111 said:
Buffett buys into KMI ...
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So has David Tepper. He also bought AMLP and a few other MLPs.

Buffett And Tepper Buy Stakes In Kinder Morgan - Kinder Morgan, Inc. (NYSE:KMI) | Seeking Alpha

Tepper makes big bets in Kinder Morgan, Energy Transfer, Williams Partners

AMLP going up pretty fast this week. I think the announcement by SA and Russia may have set a floor on MLPs if not oil...

Now my problem might change into one of getting as many shares as possible while its still low... I have 19,280 shares right now.
 
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Today was the pay date for AMLP dividend. I re-invested and purchased 600 more shares. Total is now 19,880. I may stop adding once I hit 20k, just because I am OCD about even numbers lol... :uglystupid:

Dividend income from AMLP is almost up to $24k now. Living expenses are roughly $28k a year. I'm going to have to deal with this lack of diversification problem... My plans were to ESR at 45 (i.e. find a part-time IT job, 100% telecommute), which gives me 5 more years to diversify. I'll have 20 years vested in the pension by then as well.

I saw a video on youtube recently interviewing Billy and Akaisha (I bet many are familiar with them). They said their average expenses have been around $24k per year for the last 26 years, for both of them combined. That's very inspiring.

Here is the interview:

 
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I just looked up AMLP, it showed an expense rate of over 5%. I suspect this 12% sec earnings is somehow a myth. Perhaps there will be a slew of dividend cuts, or something else. Anyway I certainly don't understand this investment choice people are making.

Sent from my Nexus 4 using Early Retirement Forum mobile app
 
O.K. I've looked at more details about AMLP. While it has an expense ratio of 5.4%, it uses most of that to cover taxes. Only about .85% is for management fees. However, it is not run as a typical ETF, but rather, as a corporation. I can't figure out, so far, if SEC oversight is the same for this sort of investment vehicle or does it have less oversight being run as a corporation?

Also, Mstar rates it as 2 stars, some reports suggest that it lags its peers by 3%. However, that appears to be to be from the convenience of this corporation taking care of all the K-1s that would be necessary, had it been a bunch of MLPs. Seems kind of attractive to me now. Not for $200K, but maybe for $10-15K size.
 
Devon getting crushed. Cut dividend by 75% and now issuing 1.2b new equity.
 
OrcasIslandBound said:
O.K. I've looked at more details about AMLP. While it has an expense ratio of 5.4%, it uses most of that to cover taxes. Only about .85% is for management fees. However, it is not run as a typical ETF, but rather, as a corporation. I can't figure out, so far, if SEC oversight is the same for this sort of investment vehicle or does it have less oversight being run as a corporation?

Also, Mstar rates it as 2 stars, some reports suggest that it lags its peers by 3%. However, that appears to be to be from the convenience of this corporation taking care of all the K-1s that would be necessary, had it been a bunch of MLPs. Seems kind of attractive to me now. Not for $200K, but maybe for $10-15K size.
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Yes, the high fees are for paying taxes. If you own an ETF or a CEF (that has more than 25% in MLPs) then they have to be run as a C-corp to pay the taxes and avoid the K-1s. You can also buy an ETN which does not pay the taxes and is not a C-corp. However with an ETN you will have credit risk with the bank sponsoring it.
 
ESRwannabe said:
So has David Tepper. He also bought AMLP and a few other MLPs.

Buffett And Tepper Buy Stakes In Kinder Morgan - Kinder Morgan, Inc. (NYSE:KMI) | Seeking Alpha

Tepper makes big bets in Kinder Morgan, Energy Transfer, Williams Partners

AMLP going up pretty fast this week. I think the announcement by SA and Russia may have set a floor on MLPs if not oil...

Now my problem might change into one of getting as many shares as possible while its still low... I have 19,280 shares right now.
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Congratulations - you're doing well in AMLP.

I initiated a small position in the low 9's recently ( just 200 shares ) so hope it will recover to the teens as the O&G picture brightens a little.

Perhaps OPEC has felt enough pain to really want to do something, despite the mutual distrust and suspicion.
 
Thanks Coolius,

I have 19,880 shares of AMLP at an avg cost per share of $13.83.

I didn't time the bottom very well but historically for the fund my share price is very good.

I'll probably keep adding as long as I can reduce my avg cost. My guess is that will last maybe all of 2016.

IEA data shows almost no overproduction by 2017 and large deficits the years after that.

I'm looking forward to buying something else. It's getting boring, but I'm gonna keep getting while the getting is good as long as it lasts.


Sent from my iPhone using Early Retirement Forum
 
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Once I'm done with AMLP maybe I'll add some preferreds (probably PFF etf). Also considering REM etf for mortgage reits.


Sent from my iPhone using Early Retirement Forum
 
The direction today didn't help AMLP....

I bought ERX at the close. We are going to ping pong around for quite a while.

AMLP ... I like your thesis. It's just gonna take a lot of patience - a couple years - even to get to your break-even let alone some real gains.

Do you have a target price to sell ?
 
papadad111 said:
The direction today didn't help AMLP....

I bought ERX at the close. We are going to ping pong around for quite a while.

AMLP ... I like your thesis. It's just gonna take a lot of patience - a couple years - even to get to your break-even let alone some real gains.

Do you have a target price to sell ?
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I'm confident that I'll have capital gains eventually, my guess is within the next 5 years. Not that it matters all that much as I'm not selling. I'm going to keep it for the dividend income for the rest of my life. It will be a core part of my investment income.

My guess is that oil will be priced around $60-$70 sometime in 2017. Once that happens I'll probably have a capital gain. The yearly dividend growth rate will probably get back to 6% or so by then as well.

My goal is to ESR (i.e. switch to part-time work until 60 or so) in 5 years at age 45. My living expenses are around $28k. I'd like to have investment income of $30k+. Right now I get roughly $24k from AMLP. So I'm confident I'll hit $30k, but I need to diversify my income as much as possible the next five years. Age 45 is a good target as I'll have 20 years vested in a gov pension by then, which I'll be able to start collecting on at 60. With the pension and social security I will be set 60+ (not mention I have money in 401k and Roth IRA). Just need to fill the gap from 45 to 60. My guess is I'll be able to make at least $20k pretty easily working part-time in IT. The other $8k of living expenses will come from investment income.
 
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Given the impact that this worldwide pumping is having on the price of oil, effecting global markets and hurting US shale companies, I don't see why the US should not declare a moratorium on purchasing any foreign oil. Seems to me that would cause further woes for the Saudis who seem to be waging an oil war on the US. Thoughts?
 
DFW_M5 said:
Given the impact that this worldwide pumping is having on the price of oil, effecting global markets and hurting US shale companies, I don't see why the US should not declare a moratorium on purchasing any foreign oil. Seems to me that would cause further woes for the Saudis who seem to be waging an oil war on the US. Thoughts?
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Well not to get political but I think the current administration doesn't like the oil industry. So probably a non-starter.

It doesn't really matter anymore anyway. The surplus will be all but gone by 2017. There has been a tremendous amount of capex canceled. So we will probably have huge supply deficits starting in 2018.

There's also a very real possibility of various oil exporting countries imploding. I wouldn't be surprised if Iraq were to become a failed state soon. In Syria we could see Russia and Iran, in a direct war with Turkey and Saudi Arabia. The market price for oil is not factoring in any supply shocks.
 
How about leaving the politics out of the discussion, eh?:)
 
DFW_M5 said:
Given the impact that this worldwide pumping is having on the price of oil, effecting global markets and hurting US shale companies, I don't see why the US should not declare a moratorium on purchasing any foreign oil. Seems to me that would cause further woes for the Saudis who seem to be waging an oil war on the US. Thoughts?
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Here's some thoughts:

Well, first of all, crude oil is traded by brokers widely to minimize tankering costs and curtailing foreign oil purchases would be like untangling a ball of snakes floating down the Mississippi. We buy and trade oil with quite a number of foreign entities (over 20 last time I checked the EIA). Our biggest import of crude is from Canada and then Mexico. Saudi's are third I think.

Plus, the Saudi's own three U.S. refineries and over 400 terminals in the U.S. that were bought from Texaco in the late 1980's (I worked on that transaction for ARAMCO at the time). The Venezuelan's own a refinery in Lake Charles, Louisiana and other assets in the U.S. (at least they did recently). Foreign asset owners has rights to bringing in their crude for processing with their assets so curtailing them will be difficult.

Another reason is that we are not completely able to provide our full crude slate here in the states with our U.S. producers. We are short a few million BPD and it would take several years to get to the point where we can produce enough crude oil to meet demand and add a replacement buffer percent.

Also, in recent years, as an example, Anadarko partnered their Eagle Ford assets with the Korean National Oil Company to the tune of $2 billion in funding for future drilling. The Korean's would sell their portion of the crude here. There also have been some Chinese deals in the U.S.

There are many more deals like this that throw a wrench into the soup if the U.S. were to limit foreign crude purchases for our domestic use.
 
Thanks aja for the detailed answer. Certainly more going on here that I was not aware of, and unfortunately it looks like no easy way to turn this situation around, but I do wish we would at least do something to send a message to the Saudis in particular.
 
DFW_M5 said:
Thanks aja for the detailed answer. Certainly more going on here that I was not aware of, and unfortunately it looks like no easy way to turn this situation around, but I do wish we would at least do something to send a message to the Saudis in particular.
Click to expand...

I wish there was an easy solution to $70/BBL oil (which we all need), but there doesn't seen to be one.
 
Controlling oil imports sounds like the beginning of a trade war. I thought that high tariffs and trade wars were what caused the great depression in the 30's. I'm thinking there might be a better way.

Sent from my Nexus 4 using Early Retirement Forum mobile app
 
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