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eom

Denny Schlesinger
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Yep!

So think natural gas....not the commodity, but the movers of same.

Cheers!
Murph
II and PP Home Fool
(long lots pf NG pipelines)
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So think natural gas....not the commodity, but the movers of same.

Can you expand on that? I don't quite follow.

Denny Schlesinger
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Hi Denny!

Due to the amount of NG available as a fracking by-product (and it's dramatically lowered price), I see NG as the "bridge" fossil fuel....that is, the bridge to other, cleaner energy sources, as we gradually replace more coal and oil (at least in generating electricity). Of course, this transition will take quite some time, but the trend is clear...the US has recently crossed the point wherein the amount of electricity generated from NG exceeds that of coal (33%+ versus 30%)....and the trend continues.

Rather than a pure commodity play on NG (that it's price will rise as demand increases,assuming the supply situation remains as is...a big assumption), I have invested in the best of class NG pipeline MLP's....which were beaten down during the last few years of energy stock price declines. The best of these companies derive most of their revenue from the transportation of NG (but some also get income from oil transportation, and other petroleum-based "liquids"). Some of then have NG price related exposure; some don't...and the amount varies. Sort of a sell the "picks and shovels" approach versus the gold miners.

Personally, I have focused on these names, in the following order of safety (distribution coverage ratio and debt levels/payoff schedules....and lesser exposure to NG commodity pricing:

MMP, EPD, OKE, SEP, ENB....with MMP and EPD being the cream of the crop.

If you have invested in MLP's before and are aware of their special tax situation and implications, great. If not, read up on them before you do....not sure if you have the same sort of tax issues (i.e. UBTI in tax-deferred accounts).

None of these names are the fast-growers that you tend to favor; rather "get-rich slowly" types of investments....perfect for the nature of my portfolio....and one of the keys to having achieved my goal of meeting 100% of all living expenses from a combination of dividends/distributions, Social Security and a VERY small pension (about $9K/year) by age 70.

Of course, my opinions a few dollars American will fill your gas tank in Venezuela. ;-)

Cheers!
Murph
II and PP Home Fool
(long MMP, EPD, OKE, ENB and a few other pipeline MLP's)
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OOPS!

I should have noted that OKE is a C-corp, which just bought out/consolidated it's energy pipeline MLP (OKS)....which makes for a better/lower overhead situation.
Cheers!

Murph
II and PP Home Fool
(long OKE)
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....a "duh" day for me:

I am also long SEP.

Cheers!
Murph
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LOL!!!

This is demonstrating the futility of thinking BC (before coffee):

ENB is also a Canadian C-corp, who owns a lot of MLP's, including SEP.

Cheers!
Murph
II and PP Home Fool
(long ENB and SEP)
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Murph, as non-resident alien I don't pay capital gains taxes but pay a 15% withholding tax on interest and dividends. This is one of the reasons for favoring growth over dividends. I don't know how distributions would be classified. I'll stick with growth. ;)

Thanks,

Denny Schlesinger
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"If you have invested in MLP's before and are aware of their special tax situation and implications, great. If not, read up on them before you do....not sure if you have the same sort of tax issues (i.e. UBTI in tax-deferred accounts)."

MLP ownership can be a problem even in tax-deferred accounts, as I understand it - income may become taxable even in a tax-sheltered account like an IRA.

Another issue with MLPs is that they can be converted to standard, stock ownership which may bring some unwanted homework. Here's an article describing the conversion of Kinder Morgan a few years ago: http://charlessizemore.com/kinder-morgan-filing-your-taxes-a...
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Hi Beishma!

The UBTI issue (unrelated business taxable income) which I mentioned in my post is an issue specifically for tax-deferred accounts....not taxable accounts.

As to KMI buying out it's MLP's (KMP and KMR)....well, I owned KMR....and when the buyout was announced by KMI, all I had to do was sell my KMP on the open market....which I didn't do....and thus suffered the KMI post-merger price decline debacle. KMR (versus KMP) did NOT suffer the tax hit/complications that KMP did.

To be clear....the choice was mine, with plenty of notice.

Of course, hindsight is perfect. ;-)

Cheers!
Murph
II and PP Home Fool
(long KMI.....and who has made some profit back on a series of KMI calls and puts as it as cycled)
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