GNE - Genesis Energy

[Beagle]

People need power and gas. Even in a protracted deep recession GNE will still do well and one will still get their 8%.

[ratkin]

People need power and gas. Even in a protracted deep recession GNE will still do well and one will still get their 8%.

I bought a few more, the way interest rates are going it should be well supported

[Beagle]

These still trade cum the dividend, ex date is 11 Sept from memory. I have quadrupled my stake in the last week and intend to hold long term as I can't see any point in having money in the bank other than what's needed there to be spent. Rightly or wrongly these have become a quassi term deposit for me.
If that's stupid so be it, I'm extremely reluctant to accept 1.5% on term deposit from a bank. People always need electricity, and in some cases gas and LPG and banks are not bulletproof in a deep recession so there's no guarantees there.

[Zaphod]

People need power and gas. Even in a protracted deep recession GNE will still do well and one will still get their 8%.

I do wonder about the impact of declining commercial usage though. For example, our hospitality-industry based tenants have prior to the lockdowns, been several hundred dollars per month in gas and a few thousand per month in electricity. Both of those have declined significantly.

[Beagle]

Fair enough but GNE have a reasonable track record with their EBITDA forecasts, (obviously massive hydrology shocks excepted), and notwithstanding the effects on certain industries by Covid 19 they are forecasting a significant uplift in earnings this year. In terms of safe pretty high defensive yield I am struggling to find anything better but have an open mind for other idea's if anyone has any ?

[Stranger_Danger]

Fair enough but GNE have a reasonable track record with their EBITDA forecasts, (obviously massive hydrology shocks excepted), and notwithstanding the effects on certain industries by Covid 19 they are forecasting a significant uplift in earnings this year. In terms of safe pretty high defensive yield I am struggling to find anything better but have an open mind for other idea's if anyone has any ?

My only "idea" is to not try to find defensive yield at this stage.

I currently view banks as a place to store money overnight, and cash as something that provides optionality rather than return. If I want to purchase an investment, I use cash to do it. If the investment makes no sense any more, I convert it to cash.

My main interest with banks and cash is whether I have confidence in my ability to move money between parts of the system quickly, not the token sum I would receive for reducing this ability. The currency the funds are stored in is probably more important than the interest rate received.

These are not normal times - I suspect we're only going to know in hindsight just how not normal!

[see weed]

Just did some quick calculations. $10,000 of GNE on Fridays closing price of 2.93 =3,413 shares = $288 for the next div.@ 8.44c per share. $10,000 of CEN on Fridays closing price of 6.33 = 1,579 shares = $363 for the next div.@ 23c per share. $10,000 in the bank for 6 months gives me about $50 interest. Am with Beagle on this one and looking forward to big juicy divs in both GNE and CEN in the next few weeks. ASB has GNE at 5.84% yld and CEN at 6.16% yld. @ Fridays closing price. Ps my CEN shares bought over the last 6 weeks are now in the green $15.5K.

[winner69]

I’ve never been one to buy a stock just for the divie, esp as a de facto term deposit.

As times have changed need to do this and take the 8% on GNE ...instead of a term deposit at some miserable about.

I suppose when doing this you need to think of it as say a 3 year term deposit ..leave it in there for the duration and collect the returns ...don’t touch it.

Otherwise you’d worry about what your capital is doing ....like if I had done this a year ago I’d be rapt in the divies but distressed about about the 16% loss of capital in a year.

Or is just a case of hoping it’ll all turn out honky dory ..no matter what

[kiwico]

I’ve never been one to buy a stock just for the divie, esp as a de facto term deposit.

Warren Buffet has been quoted on this very subject, saying buying a stock for the dividend is like getting married for the sex...

Nevertheless I do hold some GEN and CEN.

[Beagle]

My only "idea" is to not try to find defensive yield at this stage. This suggests that defensive shares have already run away in price and I am not sure that's the case for some shares. The 52 week high for GNE was $3.77.

I currently view banks as a place to store money overnight, and cash as something that provides optionality rather than return. If I want to purchase an investment, I use cash to do it. If the investment makes no sense any more, I convert it to cash. I like you're approach with this.

My main interest with banks and cash is whether I have confidence in my ability to move money between parts of the system quickly, not the token sum I would receive for reducing this ability. The currency the funds are stored in is probably more important than the interest rate received. Not well know but there was a major problem in the inter bank clearing system in the week after 23 March. The Reserve bank had to step in and provide massive liquidity.

These are not normal times - I suspect we're only going to know in hindsight just how not normal!

Agreed and its going to go on and on for quite some time in my opinion.

I’ve never been one to buy a stock just for the divie, esp as a de facto term deposit.

As times have changed need to do this and take the 8% on GNE ...instead of a term deposit at some miserable about.

I suppose when doing this you need to think of it as say a 3 year term deposit ..leave it in there for the duration and collect the returns ...don’t touch it.

Otherwise you’d worry about what your capital is doing ....like if I had done this a year ago I’d be rapt in the divies but distressed about about the 16% loss of capital in a year.

Or is just a case of hoping it’ll all turn out honky dory ..no matter what

In terms of creative accounting this approach I am taking here is "out there" for sure. Its seems bizarre to try and claim a utility is a quassi term deposit because it is so extremely creative it makes little sense but extraordinary times call for extraordinary measures. For the life of me I cannot see the point in taking a term deposit at say 1.4% which after tax will generate about 1% so taking the average inflation in the last few years of 2% you're getting a negative real interest rate of -1%.

If we're going there in these extraordinary times then absolutely one must have confidence in the underlying value of the earnings ability of the business. Page 16 is interesting
http://nzx-prod-s7fsd7f98s.s3-websit...324/328796.pdf The mid point of the forecast this year is for a significant uplift to $405m EBITDA and I that's sustainable going forward. At $2.93 sure there's downside risk, nobody could argue otherwise but it has been as high as $3.77 in the last year on much lower earnings that what's forecast going ahead so there's upside potential too. The Bible which some people, (including me), reckon is the source of all truth suggests investing in 7 or 8 things so maybe no more than about 15% of one's capital. For what its worth that's what I am doing.