And the Energy Poundings Continue – UPDATED
By: Tim McPartland,
December 8, 2014 1:30 pm
The preferred stocks of energy companies continue to get splattered all over the wall today–all of them. This is likely an over-reaction, but we shall see in the month ahead.
There are 2 energy preferreds that we like (not love–who can love something that has fallen 50%)–and we can’t find any real reason to not buy them on this severe dip. Now readers should remember that we are income investors and while the issues we like are paying huge current yields–they are obviously speculative in nature. NO ONE should act without doing their due diligence (which is a lot more than reading what we write).
We wrote on Miller Energy and Goodrich Petroleum last week–and honestly we are not surprised their preferreds are falling–their business models suck. Additionally we wrote on Vanguard Natural Resources preferreds and while they are better than those of Miller and Goodrich, they are going to be severely squeezed in the months ahead.
We will post our write up tonight on Escalera Resources and will follow it up with Gastar by tomorrow night. Both of these companies have preferred stocks that are ‘of interest’ to us. This is based upon available data–irrespective of each being a ‘penny’ stock, their financials are hugely superior to any of the MLP shale drillers (not in size or maybe potential, but in actual free cash flows). We own Escalera preferreds and will likely make our 3rd purchase today of the issue (ticker:ESCRP).
UPDATE–we made our 3rd purchase of ESCRP late today and for the model portfolio. Additionally Escalera declared their normal quarterly preferred dividend after the market close.