It appears to me that markets are ‘settling in’ a bit to the Washington chaos—focusing a bit more on actual economic data instead of moving on each bit of commentary from the administration. Maybe it is just me–but market movements are not dovetailing with what I read. Regardless of the market movements Friday and today I’m not feeling a high level of comfort—always waiting for another shoe to drop.
Today is a nicely green day for us–partially caused by the CHS preferreds going ex-dividend and then bouncing right back up after the exchanges marked them down by the dividend amount. Folks still want to own these issues, although I am expecting a weak quarter (or maybe year) for them. The ag and energy markets are so-so at best and they could be negatively affected by tariffs. CHS will survive just fine as they have for years—they have bad years—when you are in the commodity markets like they are you can’t win all the time. All in all the income markets are green today–the 10 year treasury yield is drifting a bit lower–now around 3 basis points lower at 4.28%–maybe just hanging out waiting on the FOMC meeting.
Last week as mentioned I did a little buying. I added to the MidCap Financial Investment 8% baby bond (MFICL) and the Priority Income Fund 6.625% term preferred (PRIF-F). I did sell 1 issue and that was the Priority Income Fund 6% term preferred which ran up on a redemption notice–I sold to be able to move into the ‘F’ issue.
I have identified 2 additional issues in the current portfolio that are of such a size that I can nibble a few more shares so I will be looking for an opportunity to do a little buying–but just a little for now.
Along your comments of CHSCL I can’t believe my eyes when I check my 3 pipeline companies. Its like living in the twilight zone. I own big positions in EPD, MPLX & HESM. Have had dumb thoughts of selling as the paper gain is fantastic. Does anybody else out there own these animals? I actually added a few more shares this morning of CHSCL as well. Way over weight that company.
i own MPLX and EPD as well as ET and TRGP. TRGP is one of my the biggest winners i Own,I first bought it near the bottom during the covid collapse. ET and EPD are my 2 largest positions
Chuck, It is hard to read the energy markets. I assume you’re tongue in cheek on selling these 3 MLP’s as I would bet you have some hefty taxes to pay. I think the bump in oil futures because of the bombing of Yemen by traders is short lived. Even if Iran and Yemen retaliate I don’t think it will affect the supply of oil like it did decades ago. Currently the world is awash in oil.
I have taken the opportunity of the market being up today to trim a couple positions. Some at break even and one I captured the coming dividend with a capital gain.
I would be careful with energy. Unless the dividend makes it worth holding. Too many times over the last 50 yrs there have been booms and busts. One of the last busts really took the banks and the investors to the cleaners. Don’t think that could happen this time with the banks, but the investors?
Charles-
“the bombing of Yemen by traders”…now that’s what I call being proactive!
Rocks that was even before I started celebrating St Paddy day!
Chuck, I also have EPD. Not HESM but I do have HES. Both bought during the throes of Covid meltdown.
I own HESM and MPLX as well as ARLP and some others. Sitting on large gains as well and consider the same from time to time but ultimately unwilling to sell. For me these MLP’s offer an inflation hedge to my preferred holdings while still producing great income.
They are “real investments” in my book and as such benefit from a higher class of owners making them less volatile and easier to own than dividend stocks or other equities. Seems like drill baby drill will be good for energy transport.
Dan and everyone
Same situation on all the midstreams. Shocking gains.
I fully understand and agree with Charles’ concerns, but in all my portfolio I do not have a segment that I am more comfortable with in today’s uncertain economic environment.
Divs are fine.
Holding
Westie I agree with holding most of the pipelines, my concern is the energy producers.
Wow, I like the conviction of your statement. I hold most of the tickers mentioned here as well and have no exit plan. I’ll happily take distributions and if they dive due to unwarranted sentiment, I will buy more.
Hopefully any of these that are MLPs ( MPLX I know is one) are held in a taxable account. You don’t want them in an IRA because of Unrelated Business Income (UBTI).
I actually just got my k-1 for ET-i, and despite what people have warned about ubti on that one, I don’t see any listed. Anyone else?
Worst case you just pay the corporate tax rate 21% on any income over $1K.
UBTI in a tax sheltered account (IRA, Roth IRA, Solo 401(k)) is taxed at Trust rates not Corporate rates.
Irish …… It’s when you sell an MLP when you are most likely to run into problems with UBTI. The brokerage firm will engage an accounting firm to fill and file Form 990T and take the tax plus the brokerage fee for doing the 990T whether or not you owe any tax. The fee varies from brokerage to brokerage. Vanguard charges $500 per 990T. If you are unlucky enough to have it in more than one account you get a 990T for each account. Ouch!
Agree. The final 2023 K-1 for CEQP-P had Box 20, Code V UBTI income disclosed.
The initial K-1 in 2023 for ET Series I didn’t have any UBTI but it didn’t have any cash distributions either.
The 2024 full year K-1 for ET Series I had NO Code V…so it appears we are in the clear.
HESM issues a 1099 and part of the distribution is ROC.
I hold HESM LNG, TRGP and WMB. They are all 1099 issuers.