Article by Investment U
| View the Investment U Video Archive |
In focus today: Ichan strikes again at Navistar (NYSE: NAV), pipeline MLPs are pumping cash, and a political SITFA – maybe the most maddening I have ever done.
Carl Icahn Strikes Again
Carl Ichan is at it again, the second time in many months. This time his target is Navistar. Shares moved up 15% on the news of his increased position and the stock bounced off a 52-week low that was the result of previously reported disappointing earnings news.
Ichan boosted his share in the company from 10% to 12%.
Other news on Navistar has Volkswagen (OTC: VLKAY) looking at its truck line as a way of increasing its share of the U.S. truck market which is dominated by its competitor Daimler (OTC: DDAIF).
Chesapeake (NYSE: CHK) was the most recent company Ichan took a larger stake in and it had very positive effects on its stock. Despite the recent sell off in the markets, CHK ran from $13 and change to around $18 and change after Ichan announced his intention to take a greater role in the activities of the company.
Navistar, which has been struggling for years, may benefit as well from the activist investor. Many analysts have been calling for the company to take a serious look at its direction especially in its engine and truck lines. Ichan may be the guy to make them do it.
Between Volkswagen and Ichan I think we should see some action from this one.
Put Navistar on your bogie board.
“Robust profits, Tax Breaks and a Booming U.S. Energy Sector”
Barron’s described pipeline MLPs as having robust profits, tax breaks and a booming U.S. energy sector. It doesn’t get any more positive than that.
Pipeline MLPs have enjoyed great returns for some time and Credit Suisse analyst John Edwards said in a Barrons article that he sees this continuing with yields in the 6% to 7% range and growth in the high single digits. He sees total return exceeding 15% for the next year.
Edwards likes the large well capitalized MLPs; Including current Oxford Club recommendation Plains All-American Pipeline (NYSE: PAA) and former Oxford Systems Trader pick Enterprise Product Partners (NYSE: EPD).
On the tax side, 80% of an MLPs distributions are tax deferred. The remaining 20% is treated as regular income.
Many MLP owners are able to avoid the deferred portion of the taxes entirely by holding them to their deaths and coming in under the $5 million dollar inheritance threshold.
Kyri Loupis, an MLP manager for Goldman Sachs said in the Barron’s article that he sees distributions rising at 8% a year for the next three years and many MLPs benefiting from exposure to rising crude production in the US.
Loupis likes MarkWest Energy Partners (NYSE: MWE) with a 6.3% yield and its exposure to the fast growing energy production in the Marcellus shale.
Anyway you look at them, pipeline MLPs are growing cash cows in an otherwise dead income market in the U.S.
A total return of 15% per year is rare anywhere right now. Add the tax advantage and it’s almost a giveaway.
SITFA: Huge Oil & Gas Prices Following Election?
This week it goes to all the American people who according to Donald Trump on a CNBC interview are being set up by their president to pay huge gasoline and oil prices after the election this fall.
According to Trump, Obama has cut a deal with the Saudis to ramp up production, what other OPEC member’s are calling over production, to force the price of oil lower before the election.
When I first heard this I was hoping it was just politics, but I can’t find anyone who doesn’t believe the accusation – including a good friend who is an oil analyst.
The Saudi’s oil production is at a 30-year high and in stark contrast to other OPEC members; Argentina and Venezuela are at 20-year lows in their production. Most OPEC members are calling for the Saudis to reduce their output. The Saudi’s have stood firm against all efforts.
The kicker, according to Trump, is the deal with the Saudis allows them to make up for the loss revenues with higher prices after the election. Trump says oil prices will go through the roof.
Lower prices on oil now to help his re-election, higher prices later to pay off the Saudis’.
I wonder if the tax-paying portion of the American people can deduct the coming increase in oil prices Trump is predicting as campaign contributions to re-elect Obama.
If you live long enough…
Article by Investment U
