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An investor asked me the other day what’s the most interesting theme across our portfolios. It has to be the export story. This blog often chronicles the outlook for US exports of hydrocarbons. Prospects improved with the war on Iran, and the protracted closure of the Strait of Hormuz is adding to the appeal of […]

Inflation fears are the widely held explanation for the continued rise in bond yields. This strikes us as an inadequate response that doesn’t correspond with the facts. Inflation expectations are not budging – either as reflected in the TIPS market or in survey data. Real yields are at their highest since the Great Financial Crisis, […]

Midstream had a tough month in September, with the American Energy Infrastructure Index (AEITR) -8.3%, its second worst month in the past five years. Rising treasury yields pressured sectors traditionally owned for their income.  The S&P Utilities ETF (XLU) was –5.9% for the month and is now –5.7% YTD through the third quarter. The Vanguard […]

Market making in Venture Global (VG) must be a profitable business. More than most stocks, its price often follows a manic-depressive ride turning on the plausibility of presidential comments about negotiation with Iran. Following each dip as traders quickly conclude Trump’s  tweets on Truth Social are based more on hope than substance, the stock rebounds. […]

Last week’s blog post about inflation (see Estimating Your Retirement Spending) resonated with quite a few financial advisors. Several noted that persuading clients to accept sufficient exposure to stocks with the goal of maintaining purchasing power is one of their biggest challenges. The examples showing that many retirees will find their spending increases faster than […]

An increasing number of my friends are nearing retirement if not already there. Many spent years working for large corporations, and few miss it. I have no similar plans – running your own business is the most meaningful paid activity I’ve experienced, and I can’t imagine any alternative could be as fulfilling. My tribe of […]

Last week Apollo invested $9BN in Oneok (OKE), who used $4BN to finance their $4.25BN purchase of Brazos Midstream’s Permian Midland Basin G&P assets while using the remaining $5BN to pay down debt.   Apollo’s investment is structurally subordinate to OKE’s debt and entitles them to around 15% of Cashflow From Operations (CFO) but with an IRR cap of 7% for nine years, rising to 7.35% in […]

In the United Arab Emirates, they’ve started building metal cages to protect vital energy infrastructure from Iranian drone attacks. It’s probably inspired by the netting that Ukraine has been erecting over streets to protect its population from drones. In a sign of the impact AI is having on how we use the internet, AI-generated images […]

Although the war with Iran has inflicted higher energy prices on the world, companies involved in US energy exports have been among the biggest beneficiaries. The availability of oil and gas that doesn’t need to dodge Iranian missiles in the Strait of Hormuz or Houthis as it exits the Red Sea has boosted US trade. […]

I was chatting with a long-time investor the other day. He told me that he couldn’t afford to withdraw any of his investment with us. The capital gains tax would be prohibitive, he went on to explain. We both chuckled at this high-class problem. I told him that creating such golden handcuffs is part of […]

Energy Transfer (ET) is the name most widely owned among those financial advisors we know with direct investments in the sector. It is perennially cheap, and it’s a frequent topic of conversation. It’s also a significant position of ours, so it was especially pleasing to see their strong second quarter earnings. As well as beating […]

By 2035 the demand for US natural gas will reach 163 Billion Cubic Feet per Day (BCF/D) according to Wells Fargo, an increase of half from last year. The twin drivers of this will be power generation whose natural gas consumption will rise from 36 BCF/D to 61 BCF/D, and exports, mostly Liquefied Natural Gas […]

The 75th edition of the Statistical Review of World Energy contains all the data a student of global energy could need. If you need to know Latvia’s solar power generation over the past couple of years (1.4 Terrawatt Hours and 2.0 respectively), this is the place to look. Last year the world produced 600 Exajoules […]

Since the Iran War began at the end of February, the price of European LNG and a composite of three US LNG exporters (Cheniere, Venture Global and NextDecade) have tracked each other fairly reliably. At the outbreak of hostilities, LNG investors were slow to realize the opportunity, but after a month of conflict both were […]

We’ve been providing sector updates to a number of clients recently. Midstream had a good 1Q but stalled during 2Q. The resumption of hostilities last week pushed stocks higher, but even without that we think valuations remain attractive. Enterprise Value/EBITDA at 11.1X is close to the ten-year average, a period which includes the 2020 pandemic […]