A Related account has been slowly buying and will continue to add to the position
In an account related to LOTM we have been slowly accumulating shares of AM as it dropped in value. We like the company (AM). Management at AM seems above average. Its sister company, Antero Resources (AR) $2.67 also seems very well managed. AR is the exploration and producing sister company while AM is the pipeline transport company.
Anteros Resources (AR) $2.67, is the fourth largest Nat Gas company in the United States.
- In Q2 report – Aug 23, 2020: “Antero Midstream raises guidance for full-year free cash flow to $445M-$475M from $375M-$425M, while return on invested capital remains steady at 14%-16%”.
- Full headlines linked here: Antero Midstream cuts capex guidance by a third, trims EBITDA outlook https://seekingalpha.com/news/3608589?source=ansh $AM, $AR
Yes, the dividend could be at risk due to political changes in the November elections but to date, both AR and AM are proving Wall Street wrong about survival – which was a topic of conversation. Therefore, the sentence copied above has real meaning.
At $7.00 – AM had been the best performing Midstream company in 2020. The opinion of AM by analysts, has started to turn positive. Oil weakening on excess supply talk out of Saudi Arabia, and the Biden/Democrat threat of stopping all subsidies to the US Oil and Gas industry if elected, (in the Democrat platform – unlikely to pass but who can say) have given us another opportunity at a 20% plus dividend. In my opinion the shares are now over sold. I did not think we’d get another opportunity at this price and dividend. Here we are, however.
AM as a transport company, is not so dependent on the price of Nat. Gas but its parent company AR is sensitive to Nat. Gas prices. So, include below is a chart of the price of Natural Gas. The two companies are closely linked in ownership and in AM dependent on AR for gas supply.
Note: the seasonal activity last fall – 2019 – September to November. Not that seasonal patterns will repeat in exactly the same way, but it is a pattern one could model after for comparison purposes and expectations.
- Finviz forward P/E ratio is projected at 6.09 with an earnings recovery of Plus 430% next twelve months. Link here for source
We are optimistic that the Democrats will not get their complete way in a new administration. We not even sure the liberal portion of the Democrats wants to totally eliminate the oil & gas industry subsidies but are currently appeasing the Progressive wing. I trying to be objective and fact based but one never knows for sure what will happen. I am working the odds that one Biden fails in his attempt to be President and second if he does become President he fails in the total agenda as put forth by the Progressive wing of the Democratic party. Think the senate can remain in the hands of the republicans for the next administration cycle. As such we are buying what we consider company we believe can be a survivor, prosper and paying a very attractive, 22% dividend.
Where Value meets Buy Signals!
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* An account related to LOTM holds a position in this security. These Investments are bought and sold constantly.
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