Solar Stocks Get Crushed As Interest Rates Find A Short Term Bottom

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As I wrote last month, solar stocks have been on a tear. (HERE) Since early April project developers like Vivint (VSLR-NYSE) and SunPower (SPWR-NSDQ) are up 50% and 100% respectively.  Producers of solar inverters, such as Enphase (ENPH-NYSE) and SolarEdge (SEDG-NYSE), have performed even better.

The moves in these names really got going in the spring and that momentum carried through into the summer.   But in September the momentum has slowed abruptly. High-flying names like Enphase and SolarEdge have made abrupt corrections.

So what’s going on?

I explained last month how this is a bull run being driven by demand.  Just look at Enphase, which saw revenue increase 77% year over year and 34% sequentially in the second quarter.

Source: Enphase August Investor Presentation

Meanwhile SolarEdge saw 20% sequential and 43% year-over-year revenue growth.

Source: SolarEdge Third Quarter Earnings Presentation

Without a doubt that demand reflects the secular expansion of solar based electricity.  But there is another factor, often overlooked, that needs to be considered.

The run up in solar stocks from April has traversed a similar type move in longer dated bonds.  The slump in September has coincided with a similar correction.

On the surface this would seem to be coincidence.  After all, what does the 10-year bond have to do with a solar panel?

More than you think.

Solar stocks are VERY tied to rates–because of the financing required.

Solar projects are expensive upfront.  They require lots of capital.  You make back that return over years of producing cheap electricity (and collecting government subsidies to do it).

Therefore, developers of solar projects are always looking for investors willing to put up capital to fund their projects.

Most districts subsidize solar projects as a way of promoting green energy.  In the United States, these subsidies take the form of an investment tax credit.

The tax credit came with the Obama administration, which used it as a way of propelling solar demand.

The tax credit right now is 30%.  It is going to be reduced to 26% in 2020, reduced further to 22% in 2021 and then to 10% thereafter.

This is likely the first reason solar stocks have run-up – there has been demand pull forward due to the coming subsidy reductions.  Why wait until next year for a solar project that could be done today with 4% extra subsidy?  My though there goes against the late Guy Sella’s (SolarEdge founder) contention that nobody buys solar for subsidies anymore.

That tax credit also has another effect – it is used to help fund the project.

Here’s how it works.  The developer finds a partner that has a tax liability they’d like to offset. The developer makes a deal, saying they’ll pass on the tax credit to the partner if the partner funds part of the project.

The partner won’t fund the project dollar for dollar.  They need it to be more attractive than just paying the tax.  So they’ll do it at a discount.

Here’s where the bond yield comes in.  If yields are going down the investor requires less of a return …read more

AFRICAN GOLD GROUP AGG-TSXV/AGGFF-OTCQB TRADING FOR PENNIES, IT WILL GENERATE MILLIONS IN CASH FLOW

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African Gold Group (AGG:TSXv) is the soon-to-be junior gold producer that will be churning out millions in cash flow, as their Koboda Gold Mine ramps up to 50,000 oz per year, then 100,000 oz per year.

I can’t believe the stock is still trading for pennies – 40 of them buys a share!

Management’s timing here was impeccable. They bought the Koboda asset in 2016 when nobody cared about development projects.  In 2015, Koboda was a large, simple gold deposit, at surface, and ready for production. But no one wanted it – even though it is surrounded by multi-million ounce producing mines!

The base case on the 2015 feasibility study said Koboda would generate excellent returns at $900.

And now it will into production with gold trading at $1,500 per ounce and rising.

Now this project is going to be an absolute home run. And it’s still trading for pennies. Crazy. I think investors here stand to make HUGE gains.  That’s why I’m long.

At $1,500 per ounce Koboda will generate tens of millions in cash flow.  The 2015 feasibility didn’t even have $1500 gold in any of its charts.  Nobody thought Gold would go this high then.

This team has made Big Money before in West Africa.  They bought the Tabakoto mine – which was having real problems – for $20 million. They turned it into a 150,000 oz per year producer and sold it to Endeavour Mining in 2012 for nearly $400 million. Almost 20x their money in two years!

Ka-Ka-Ka——CHING!!!!

That’s Big Money in a short amount of time.

And that’s what I see happening here at Koboda.  There’s 2 million ounces so far – but only a small portion of the property has been explored.  There’s huge upside for millions of more ounces.

An aggressive drill program will be starting ASAP, and those numbers should help get the story a much bigger – and eager – audience.

The asset is permitted – construction could start tomorrow.

They bought it for almost nothing… management acquired this mine in the doldrums of a decade of stagnant gold prices.

It was like buying a house at the bottom of the U.S. Housing Crisis.

Buying at the bottom meant that African Gold Group was able to get this project that is profitable at $900 per ounce gold at a throwaway price.

They had the foresight to identify and buy a highly economic project when nobody else was interested.  But trust me, everybody is going to be interested now.

Here’s an asset that is

2 million ounces and growing
Fully permitted
At surface, so…
Cheap mining – All-In-Sustaining Costs are $788/oz
Low capex – this mine will only cost $45 million to get to its initial 50,000 oz per year
And in the hands of a team that has built and sold juniors before – for nearly 20x their money in two years!

I’ve met and talked to the team – they can raise the money.  In fact, if Gold is still moving up while they’re building the mine, the plan for the Koboda Gold Mine will be to go straight to 100,000 ounces per year …read more

Here’s My Strategy—And My Stock—For Gold This Year

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I see Gold as a great place for capital gains for at least the next two years.  I’m positioning me and my subscribers in junior producers that can generate big jumps in cash flow and resource size over that time.

Gold is benefiting from MANY trends right now

Negative interest rates around the world (they’re going more negative than you can imagine…)
China-US trade war
Global investors being massively underweight the sector
Central Banks are net buyers of gold
Gold’s short, medium and long term charts look GREAT

Because of all this, I see the Gold Price going MUCH higher – in the near to medium term. I see US$2000/oz in the cards. That means cash flows and stock prices are also going much higher – in the short to medium term.

A lot of money will get made in Gold in the coming two years, and I want to make as much as possible.  So I went looking for what new mines are coming into production in the next couple years, and see which ones have the lowest cost of production.

At this early stage in the Gold cycle, this strategy makes the most sense to me.  The Market won’t price in production more than a year out, so I’m still able to buy these stocks at a dirt-cheap valuation.

After weeks of research, I found the one I wanted to buy BIG – and I just bought 450,000 shares of it.  It was a ridiculous cheap price too – just 21 cents a share. TWENTY-ONE CENTS. Crazy – for an asset that will be churning out tens of millions in cash flow within two years.

They already have over 2 million ounces identified, but I expect an aggressive drilling campaign to increase that A LOT in the coming months.

And as their new low cost mine comes into production – and when I say low cost, I mean All-In-Sustaining-

Costs (AISC) under $800/oz, the Market will reward shareholders.  It’s a low cost, open pit mine that will be cheap to build and produce ounces cheaply.

And this asset was designed for $900 Gold.  Prior to Gold’s breakout a few months ago, finance money for Gold was tight – and no new asset would get funded unless it made a pile of money at $900 Gold.

Imagine what the economics are for this asset now – at $1500 Gold – or $2000 Gold.  The payback and profitability are OFF THE CHARTS for these assets.  These assets will be MAJOR CASH COWS in today’s new world of Gold.

And investors can still buy this stock for a bag of pucks.  Nothing.

It’s a great set up for investors.  I’m spending a HUGE amount of my time on this strategy right now.

I had to do some digging to find this gem. When I looked up their 2015 feasibility study, the independent authors didn’t even include $1500 Gold in their projections. Nobody thought Gold would get that high.

At $1200/oz Gold, the IRR of the mine was forecast at 43% and payback was just 2.5 years – very profitable even …read more

This Company Makes Money AND Grows Like Crazy

Pretty much every tech company I cover at sister publication investingwhisperer.com had a great Q2.  Revenue and EBITDA were up – but it didn’t always make a difference to the stock.

But it sure made a big difference for Assure Holdings (IOM-TSXv / ARHH-OTCQB).  I wrote to you about Assure a few weeks ago, holding it up as the poster child for the types of non-energy companies I cover at Investing Whisperer.

Denver-based, the company has a unique business model that provides neuro (you know, like brain)-monitoring during surgeries.  It’s an extra layer of insurance that tells the surgeon if the patient is having any reaction during a surgery.

Assure announced a great Q2 on Thurs Aug 29:

Number of procedures (surgeries) monitored up 109% to 1466
Revenue up 137% to $8.4 million YoY
Adjusted EBITDA up 256% to $5.7 million – a HUGE jump
Gross margin was up to 79% from 70%

Normally, growth costs money.  But Assure is generating cash every month while growing this fast.  They actually have net income.  It’s such a strong business model, Executive Chairman John Farlinger decided to  become permanent CEO and stay as Chair.

They’re expanding geographically – they started in Colorado but now expect to be in 9-10 states by year end.

They have enough critical mass now that they are cancelling all their third-party billing – for which they paid 8% of receivables and had to wait months (often over a year) to get paid.  Under the new billing Joint Venture they announced, they are effectively bringing the billing in house – they are now paying themselves.

On a $30 million run-rate, that is a $2.4 million savings.  Assume they actually net 50% of that (they still have to pay their in-house people) but as revenue ramps up, this becomes a greater and greater savings.

With this new JV, Assure expects to increase the gross amount of receivables and increase the speed of collections, all the while greatly increasing the number of surgeries.  That’s a slingshot of revenue, if they can make it happen.

Collecting receivables have been The Big Negative here (witness the big writedown earlier this year) and even in this quarter, growth in cash actually collected is not as much as revenue growth.  That’s what CFO Trent Carman and Paul Webster were specifically brought in for.

There were three very important initiatives announced on the conference call.  One was the move to in-house billing as I’ve just spoken to.  The second was management saying they are ready to grow via acquisition, which would mean bringing surgeons and the practice in-house.  I’m not sure how that will work, but I’ll see what colour they’re willing to give on that in a call with CEO Farlinger later.

The third initiative is taking some of their procedures “in-network” – i.e. agree on a pricing schedule with a major US national insurance company for their neuro-monitoring.  Right now Assure is almost all “Out-of-Network”, which means they negotiate with the insurers on each surgery.  That’s why receivables are low and slow.

Going “In-Network” will mean a bit less …read more

Every Junior Has A Story. This Is The Strangest Ever.

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One of the strangest junior energy stories listed in Canada may become one of the best in late 2019.
Newport Explorations (NWX-TSXv) holds a 2.5% gross overriding royalty on several oil and gas permits in Australia, that are operated by Beach Energy and Santos Ltd.; both are major Aussie oil and gas producers.

What that means is that Newport receives 2.5% of the revenue from any production on those blocks without having to pay for the cost of developing the assets.  Newport shareholders get all this royalty money for doing NOTHING.

This company does NOTHING except cash cheques.  It’s a great business, and has been for years.  Royalties have been flowing since 2013 (I’m going to outline it all for you below); it’s an incredible cash cow.  I have been a small shareholder for years, just to stay close to this amazing story.

CEO Ian Rozier and CFO Barb Dunfield have done a great job shepherding value for shareholders in what has been a very turbulent time for other junior energy stocks.

With no costs and only revenue, the company even spits out the occasional dividend.  The last dividend was 5 cents per share, or $5,153,194 in the quarter ending October 31 2018. There is no powerpoint on the site to check historical dividends.

But it may become a regular dividend soon, which could give the stock a big boost.

I’m writing this story now because I see that RBC Dominion – Canada’s largest brokerage house – issued a bullish report on Beach Energy on August 19.  And I saw in the last MD&A that Mr. Rozier’s pay package just went up to $42,000 per month, and Ms. Dunfield’s just went to $29,000 per month.

This great team has kept the cash flow going for shareholders – the most recent quarterly shows that net income was $3.9 million for the last nine months, up from $2.7 million a year ago.  Royalty revenue was $6.8 million for the nine months, up from $4.9 million a year ago.

While management deserves all the credit they’re due, the light oil assets have done really well.  And the gas exposure is great as Aussie natgas prices – which were just $4/gigajoule in 2015, before spiking to nearly $20 a couple years ago.  They are now roughly $10.

It’s one of the most profitable natgas markets in the world.  Domestic Aussie prices are so high because all their natgas is now exported to Asia – at lower prices than domestic ones now ($7.50 in Japan vs $10 in Australia)!  Electricity prices in Australia – especially along the east coast – have more than doubled in the last four years.  Production from the wet gas assets is also increasing.

Yes, Newport could continue to be an amazing cash cow as production from these lands – and Aussie gas prices – each go higher.

This is a GREAT story folks – it may be a great investment today, but one day it will be a great movie I’m sure.  Sit back and enjoy the read.

In a very prescient …read more

Looking for a Sustainable 15% Yield? It’s Right Here

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I know that everybody hates coal.

But…

Consol Coal Resources LP (CCR) currently sports a massive dividend yield of 15.4%… and analysts think it’s sustainable.

I know what you’re thinking—they get paid good money to say things like that. But I’ve taken a look into the numbers and I agree.  Even though spot met coal prices dropped 30% recently, CCR has contracted prices through the end of next year that make this yield very sustainable.

And savers and investors are absolutely starved for options that provide income – especially as sovereign rates around the world go negative.

Record Low Yields from All Income Sources

The safest long-term investment on the planet is meant to be the 30 Year U.S. Treasury – but it’s only yielding 2% – an all time low.

Treasuries hardly provide any income – today they are a place to park money for institutions that have no other option.

They aren’t for investing or for income.

If you think that bonds are the answer for income a person could always look to corporate or even junk bonds.

But I wouldn’t….

Yields on investment grade companies are miniscule.

Junk bond yields do not nearly compensate for the risk involved.

I just saw a small-cap homebuilder offer 7 year unsecured bonds that have a yield of 4%.  That is where we are… a small-cap company in a heavily cyclical business can borrow at 4% on an unsecured basis.

I’d rather stick my money in a tin can and bury it in the backyard.

Perhaps we can travel outside of North America and buy some safe Government bonds with a decent yield.
Perhaps not!

More than a third of bonds that trade globally now have NEGATIVE INTEREST RATES.

There are now almost $20 trillion European Government bonds with negative yields. All bonds issued by the Government’s of Germany, Denmark, Finland and The Netherlands sport negative yields.

I saw an article where a bank in Denmark is even offering a negative rate mortgage – sign me up for that one please….

This is a bizarro world where the borrower has to pay the lender for the privilege of lending him money.

Outside the world of bonds… blue chip dividend paying stocks are no better.

The stock prices on the best businesses on the planet have been bid up so much that the dividend yield on the S&P 500 is now just 1.88%.

That isn’t an income stream… that is a dribble.

Coal Is Dirty – But the Money from That 15.4% Yield Isn’t

This week I read a note from Goldman Sachs that confirmed what I already believed.

Cyclical companies with abnormally high dividends are out of favor (just look at the MLP space in the US!).

According to Goldman the valuation gap between high and low dividend stocks is the widest it has been in 40 years.

Goldman’s obvious conclusion is to buy high dividend paying stocks.

Well… they don’t come with a much higher dividend than Consol Coal LP’s 15.4% current yield.

With a yield that high the market clearly is pricing in a dividend cut.

The analysts that follow the company don’t agree – they think it is sustainable …read more

SOLAR STOCKS ARE HOT!!

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Solar stocks are flying – especially those that make & sell inverters, like Enphase (ENPH-NASD) and SolarEdge (SEDG-NASD).

Quick refresher: inverters  are devices that try convert power from DC (solar panels) to AC (what your home uses).  There are lots of inverters out there, with slightly different technologies, but all are meant to maximize the AC power out of your DC photovoltaic panels.

This market has just gone CRAZY this year – out of the blue. It’s a grassroots demand scenario that has COMPLETELY taken the Market by surprise. 

How do I know this?

Look at the gaps in the stock charts of both ENPH and SEDG – the Market had not priced anywhere close to the kind of growth these two inverter market leaders are going through right now.

 

This is happening despite trade wars, despite Chinese tariffs (SEDG is opening a 2nd plant in Vietnam now; ENPH is opening one in Mexico).

Sell side research I’m reading says component parts pricing has come down A LOT… making solar much more economic.  There does appear to be areas where solar can compete against greenfield coal baseload power or against natgas peaker plants (expensive back-up facilities that are only used during peak power times during the day).

SEDG CEO Guy Sella said on the Q2 conf call that nobody buys solar for subsidies anymore.  I would argue that’s not quite true, as analysts are suggesting the end of subsidies is now actually pulling forward demand.

But the volume of units sold and the stock charts say he is mostly right.

SEDG is a big story on both sides of the Atlantic, in both Europe and the USA – Europe was 48% of business and the USA was 41%.  The ROW – Rest of World – was 11%.

The Market is right to love this story – SEDG – as the growth is phenomenal, it’s organic, it’s not just about the USA, it’s both residential and commercial… and the balance sheet is pristine.

AND… the Market is excited about new products for utility sized solar and energy storage…

AND… management keeps showing innovations not only in new products (mgmt. has made several M&A moves recently, vertically integrating their business and using various technologies together in new ways) but also reducing costs on existing products

AND… there appears to be room for everyone.  Competitor Enphase announced 100% increase in YoY revenues, and it had the same kind of jump recently.

Here are some of the quick financial highlights from SEDG Q2:

Record revenues of $325.0 million
Record revenues from solar products of $306.7 million
GAAP gross margin of 34.1%
GAAP gross margin from sale of solar products of 36.4%
Non-GAAP gross margin from sale of solar products of 36.9%
GAAP net income of $33.1 million
Record Non-GAAP net income of $49.3 million
GAAP net diluted earnings per share (“EPS”) of $0.66
Record Non-GAAP net diluted EPS of $0.94
1.3 Gigawatts (AC) of inverters shipped

I think the Market is ready to start pricing in some great revenue growth as both ENPH and SEDG move from inverter sales to full solar package sales, which …read more

I ASSURE YOU, I THINK THIS STOCK IS A WINNER IN 2019

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Assure Holdings (IOM:TSXv / ARHH-OTCQB) is just starting one of the biggest growth curves of any junior company I have ever seen.

It’s a medical story that sells itself because it has such a compelling value proposition for doctors, patients, hospitals and insurance companies.  Assure matches up highly qualified neuro-monitoring technologists with surgeons, monitoring patients for them in the Operating Room – the OR.

The number of surgeries they monitored grew 76% last year.  That volume should grow almost 100% this year.  How are they growing? Doctors are referring other doctors by word-of-mouth. That’s why profit margins are so high – 70% – and that’s why growth has been so high.  I expect 2019 revenue to be $25 million, up from $6.35 million three years ago.

Assure operates (pardon the pun) what I call a pull business model – where they turn a cost in the Operating Room (OR) into a profit centre.  Doctors want in – they want what Assure is offering.  With Assure, doctors are increasing their annual income by six-figures, and patients are getting better treatment.  It’s win-win.

This is the type of company I am uncovering at my new newsletter, InvestingWhisperer.com.

I’ll explain all these details in a minute, but understand a few things right away:

This company has generated a profit almost every single month since going public two years ago
This business model is unique so far… creating A Big Moat against competitors. You must understand how doctors and insurance companies think and act – from state to state – AND offer both a compelling value to doctors and patients.  I know of no other company operating exactly like they are.
Only 34 million shares out and management owns half of them
NO analyst coverage yet
Assure is keen to tell its story to investors
Growth is happening in MANY ways

Geographically – # of states – they’ve gone from one to six in the last 18 months and they hope to be in 10 by Year End 2019
Types of surgeries – has been primarily spinal but expanding into cardiovascular, orthopedic and ear, nose and throat
Number of doctors becoming partners and customers
All leading to large increases in the # of surgeries that Assure is monitoring

Source: Assure Corporate Presentation
I’ll outline the compelling story below.  But the last two things I want you to understand are – I have $200,000 of my own cash invested because….

I think this stock is about to do VERY WELL for me in the near term – so this is THE STOCK that I’m giving to you for free to introduce you to my new newsletter The Investing Whisperer.

In 2009 when I launched the Oil And Gas Investments Bulletin I gave away energy stocks that turned into doubles and triples.

Those Big Wins gave investors the confidence to try me out – and my subscriber  count soared from zero to 2,000 from the excitement those stock picks created.

I’m no fool – I didn’t forget what I learned in 2009.

This is my most important stock pick in a decade and I’m …read more

My Best Investment Idea for 2019–Yours for FREE

I’m about to do something that – at first – might not make sense.

Tomorrow I am going to give my best investment idea for the next 6-12 months to the entire world – with no strings attached.

Just open the e-mail I send you tomorrow and you will have my absolute best stock idea.

It’s the one stock that I want to own for the next week, the next month and the next two years – likely more.

There is very much a method to my madness – and I expect to be a Big Winner because of it.

Let me back up – in March 2009 I launched my Oil and Gas Investments Bulletin.

The timing could not have been better – March 2009 was literally the best time in history to be launching an energy focused newsletter.

The timing was also no accident.  I knew March 2009 was GO time.

When I rolled out the OGIB newsletter I did so by giving the first few picks away for free.

Because of that great timing – and some good stock sleuthing – my free picks were all homeruns – and so were the first few subscriber-only picks.

I had doubles and triples every few months.

When those free picks did so well – my paid subscriber count went through the roof.

In no time at all I had 2,000 paying subscribers and the Oil and Gas Investments Bulletin was off to the races.

My recipe for success was simple.

Give investors a grand slam homerun investment idea for free – and it will do wonders for growing a new investment newsletter service.

This New Stock
Is What My New Newsletter Is All About

Ten years later – right now – I’m launching a new investment newsletter service called The Investing Whisperer.

The Investing Whisperer is focused on finding small-to-mid-cap growth stocks with strong growth potential.

Giving away My Favourite Pick to my free-alert e-mail list – that numbers in the tens of thousands – is the single best way to get The Investing Whisperer off to a flying start.

Again, the timing is no accident.

I know that the stock that I’ll share with the world tomorrow is… The One.

It is:

unique
delivering a win-win-win for customers, industry and shareholders
profitable (already!)
growing its business volumes at almost 100% this year

Yes, it’s GO time again.

When this company grows its business volume nearly 100% this year, it will give me a VERY powerful marketing tool to grow my service.

How this stock performs from here is therefore crucially important to me.  I want a multi-bagger that happens quickly.

That’s why I’m going with my very best stock idea. It’s a company I’ve followed for years, and I even flew down to their US head office to interview every single person on their management team for an hour each  the CEO, the CFO, the VP Strategy, founders… everybody.

They have a unique business model that makes it difficult for its competitors to compete.

As soon as I got back to my hotel after that day of meetings I bought $75,000 worth of stock. Later, I bought another …read more

WHY PRIVATE EQUITY IS POURING INTO MIDSTREAM ASSETS AND WHY INVESTORS ARE NOT

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Private capital is POURING into midstream stocks in energy (think pipelines/infrastructure).

Since the start of 2018 private equity or pension fund backed midstream and infrastructure transactions total almost $10 billion.

The list of transactions includes: Wolf Midstream’s purchase from MEG Energy (MEG-TSX), KKR buying from Meritage Midstream, SCV acquiring Paramount’s (POU-TSX) Karr processing facility and Brookfield’s (BAM-TSX) deal with Enbridge (ENB-TSX/NYSE).

(That Brookfield deal is really interesting.  They aren’t usually active in this sector and they are always value focused.)

A perfect example of this was TC Energy’s (TRP-NYSE/TSX) recent $1.15 billion sale of an 85% interest in the Northern Courier pipeline to the Alberta Investment Management Company (AIMCo).

The purchase price for the pipeline was 14 times EBITDA… a good sized premium to the 10 to 12.5 times EBITDA public midstream companies trade at (and WAY above the 4x that O&G producers do now!).

In January this year, I suggested midstream stocks should be strong this year, as capex as a group was declining and increased US production–in both oil AND gas–should increase their cash flow.  And the fact that PE groups are buying up assets should mean midstream stocks are cheap – but stock investors still don’t seem to be sold.  There’s no sector-wide breakout, though a few are trading near their 52-week highs.

However, even if retail investors ignore midstream valuations, there is a hidden silver lining in this high-valuation for midstream assets for them–that’s all the pipe and processing centres that the juniors own – which may now be worth a lot of money in a market where there is no equity or debt! I’ll get to that later.

After doing some research, I found there’s clearly a different mindset in how private capital deals with midstream plays – that retail investors could never stomach.

I found that private capital is paying big premiums for these assets today because they intend to crank leverage levels up far in excess of what a public operator can.  That higher leverage provides a nice kick to IRRs.

How is the pipeline attractive to AIMCo example above – at current multiples?

Well, according to Bloomberg it turns out that AIMCo is going to leverage up the asset to an astronomical tune of 10X EBITDA.

That would be almost four times the leverage that a modestly leveraged public company uses… at least twice the leverage that the most leveraged public midstream business tries to get away with.

The stock market wouldn’t touch a midstream business leveraged like that with a ten-foot pole.

But private capital can get away with it – in fact AIMco was able to issue debt to finance this incredibly leveraged deal at a rate of just 3.37%.

What the what?

O&G Producers May Benefit More Than Retail Investors

The investment merits of midstream equities are compelling.
They are cheap based on:

the objective data-points that are recent transaction comparables,
they offer good yield,
and they are a great way to benefit from soaring production.

Debt-laden producers are benefitting most from these high valuations, like I showed above: they trade at 4x …read more

This Tiny Canadian Company Will Replace Russian NatGas in Germany – Really!

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A PEA-sized Company with a Huge Natural Gas Vision

What do you make of a $70 million company developing a $10 billion project?

Well that is exactly what we have in the case of tiny, Calgary based Pieridae – trading under symbol PEA-TSXv.

Its an uphill battle, but I have to admit the company is giving it their best shot.  After you’re done reading, you’ll realize it’s not as far-fetched as you think.

Goldboro LNG

Pieridae is working toward the development of the Goldboro liquified natural gas (LNG) project in Nova Scotia on the Atlantic Ocean.

The Goldboro terminals will be located 250 km NE of Halifax.  It will be made up of a 5 to 10 million tonnes per annum (mmtpa) liquification and loading facility, depending on the final design decision.

For comparison, Shell’s LNG Canada project is for 14 mmtpa.

But unlike LNG Canada, which has Shell, Petronas, PetroChina, Mitsubishi and KOGAS all with stakes in the project, Goldboro is 100% owned by tiny little Pieridae.

If that’s not enough chutzpah for you, Pieridae plans to run not just the terminal, but the upstream assets as well.

It would all seem perfectly implausible if the deal didn’t have one large backer with a significant interest in seeing the project being built:  The German government.

The LNG from Goldboro will be shipped across the Atlantic.  Almost the entire first train of the project (about 4.8 mmtpa of a total of 5 mmtpa) will be delivered to German utility giant Uniper.

Uniper is the largest utility in Germany.  They buy 40% of the natural gas consumed in Germany today.

Their contract with Pieridae, which has a 20 year take or pay term, will be for 10% of overall German gas demand – that’s HUGE!

Germany is desperately looking to diversify their gas supply.  Right now, 60% of their natural gas imports come from Russia, which isn’t a safe source of supply (ask Ukraine).

Natural gas is deemed a “scarce commodity” essential for the German economy, which means that imports qualify for the export credit assistance programs.

With Goldboro being a large natural gas importer, it qualifies for Germany’s “Untied Finance Credit” (UFC) program, where the German government guarantees loans for a very big part of the project cost.

The first train of the facility would qualify for a US$3 billion loan guarantee under the program.  That’s HUGE!

In addition, Pieridae will qualify for another US $1.5 billion of loan of guarantees for upstream development of natural gas assets.

All told US $4.5 billion of the US $6 billion expected costs will be guaranteed.

What was implausible becomes more plausible.

Of course, Pieridae still needs to go out and find a commercial lender willing to fork over the $4.5 billion of funding.  But that is a lot easier (and cheaper) when the loan is backed by the German government.

To be sure, there are hurdles that remain.  Before a lender will commit to such a tidy sum, they want to know the costs in detail.  This is where we are at now.

Pieridae has hired Kellogg, Root and Brown (KBR) to perform …read more

This Small-Cap Controls Some Of The Most Important Real Estate in Your Life

What is the #1 rule of real estate?

Location, location, location.

How about your smart phone? What is the most valuable real estate on your (and hundreds of millions of other’s) smart phone?

It’s the home-screen of course; the one you see as soon as your phone boots up.

Second question.  Who owns the prime real estate on your smart phone?

You, right?  Well, not really.  Actually, you are more like a co-owner – with your wireless carrier. How so?

Before you ever touch your phone, the carrier installs their software on the device.

This is software you can’t uninstall.  You can’t turn it off.

This software the pre-installs apps to your phone before you even get your hands.

It delivers ads, notifications and recommendations to you.

It can even create a library of content curated to what the carrier wants you to see.

Yet you don’t even realize it is there.

But it is – when you try out the apps that appear right there in front of you, or click on a notification that shows up in your stream, or consider the recommended content in a folder.

What you are really experiencing is the carrier monetizing their prime real estate.

I have found THE tiny company that builds that software.  It’s in my portfolio over at www.InvestingWhisperer.com.  It’s a smallcap stock trading under $10, and growing like crazy.

It’s up 29.8% since I bought it, but I think it’s going MUCH higher. I’m going to give you my report on it for FREE.

This company is the landlord that helps the carriers collect their rent.

They find the tenants (the app developers and advertisers).  They analyze the data. They create the tools.

The carriers – and this tiny little company – just sit back and collect their rent.

What is unbelievable is that this company is a small-cap. Some would call it a micro-cap.

Yet it provides the software that lets carriers monetize 100’s of millions of devices.

I’m not exaggerating.

Their software is probably on your phone right now.  You can’t see it. You can’t uninstall it.

But it’s there.  Delivering content to your phone – ads, apps, media – whatever the carrier wants.

This micro-cap controls the prime real estate on more than 250 million  Android devices globally – and is growing at 30+ per year.

And I think this company’s stock is a HUGE winner.  That kind of real estate portfolio just doesn’t go that cheap.  Get my FREE report on it by clicking HERE.

Why is it free? Because I want you to see my independent research at www.InvestingWhisperer.com, and consider subscribing to my service.  But I understand you want to see what you’re buying.

This micro-cap is the #3 app on smartphones after Google and Facebook.  It controls what you see on smartphone home screens.  It’s growing, it’s cash flow positive and I think the stock will be a massive home run – get your FREE report by clicking HERE.



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