Home Forums Hunting & Shooting Hunter's Campfire Don't look now but stock market is booming

MAGA

MLP's are so cheap it is crazy. AMZA was $6.75 a week ago. All the REIT's are cheap but went up when the stock market was tanking this week. That shows that REITS are undervalued. MLP's however tanked with the market, making them insanely cheap.
Also, Asian markets went up today.

My plan is to retire in 4 yrs. I am still at a 70% stocks and 30% bonds. I have always been higher risk but with 4 yrs to go, I am starting to wonder about lowering the risk but, I hate to give up the returns.

I went with PONAX a few weeks ago . It is just off it's 52 week low. It is a Multi sector bond and pays 5% divies and pays them monthly. The price hardly varies at all but has gone up a little last week. I also have HYD. It is a Muni bond ETF. It pays about 4.3% and pays monthly. HYD is a tax free Muni bond. I made about $1,000 in divies last year , but somehow $9 ended up taxable so it is not taxed. If you sell for a profit then the profits are taxed.

I find market analysts like weathermen.
They are great at telling you what happened yesterday.

After running fairly high risk since 1986, upon retirement nearly three years ago at age 53 I reallocated and substantially went to index funds, short of company stock that is still being delivered. I no longer wanted to manage my investments daily as I had been. Retirement... I have been with Fidelity since 1986 and now run 45% US equities, 20% international equities and the rest in bonds/cash. Well there is real estate too, here in Texas and a couple of properties in north Idaho. The bobbles in the market have been absorbed fine and I am running very large growth every year. I ain't worried.

Booming means many things to many people.

AMZA has a average return of (- 16%) over the last three years. While the S&P is up 10% over the same time period.

https://www.marketwatch.com/investing/fund/amza/profile

[/quote]I went with PONAX a few weeks ago . It is just off it's 52 week low. It is a Multi sector bond and pays 5% divies and pays them monthly.
[/quote]


Make sure you deduct the 3.75 load fee and the 0.90% expense ratio from your return. Makes quite a difference...

http://www.morningstar.com/funds/XNAS/PONAX/quote.html

With Fidelity you dont pay load fees and the return has the .9% charge already. I wouldn't pay a load for any fund anymore , ever.

For those owning AMZA, what's the deal with AMZA dropping their dividend from $.52 down to $.11 on the last 2 payouts?

They went to a monthly pay. Nevertheless, the yield was cut.

Note on AMZA

Rida Morwa

AMZA just announced (Jan 2018) the following:

A dividend decrease from an annual rate of $2.08/share to $1.32/share. The new dividend yield is at 15.2%.

Furthermore, AMZA announced that the dividend will be paid on monthly basis at a rate of $0.11/share.

This is great news for AMZA as it results in a much better dividend coverage, as the return of capital (or ROC) to shareholders should be reduced significantly or even eliminated. AMZA is an ETF that trades at its "Net Asset Value," so any dividend reduction will not impact the price negatively. In fact, I spoke to AMZA's management about six months ago and I recommended that they take these two steps (changing the dividends from quarterly to monthly and reducing it). I am glad that they have implemented these two measures which makes this product a much better one. A reminder to our members that AMZA is different from most midstream ETFs/CEFs/ETNs in the fact that it is actively managed:

AMZA's management uses an opportunistic buying strategy which allows them to overweight stocks that have sold off for reasons they view unwarranted.

They also sell covered calls to boost profits.

This ETF is set to outperform going forward.

Thanks

Trying to understand why you are recommending a ETF that has gone from $24 share in 2015 to its current price of $6.84?

https://www.nasdaq.com/symbol/amza

Dividend play with a 300% equity loss?

With a management fee of almost 2%, 300% loss over the last three years, a one star rating from morning star and a reduction in dividend payout I would need a very strong argument to invest one nickle into this ETF.

If one is looking for a dividend play and is willing to take on some risk CIF pays a 9% dividend and has hovered around $3 share over the last five years. Caveat emptor

http://www.morningstar.com/cefs/xnys/cif/quote.html

t185 - Here is the original buy alert for AMZA in May 2016


BUY ALERT AMZA
- A Close Look At AMZA, An ETF With 20% Yield

May 14, 2016 10:28 AM ET•AMZA

Rida Morwa - High Dividend Opportunities

Summary

Buy Alert: InfraCap MLP ETF (AMZA).

+ InfraCap MLP ETF (AMZA) is an actively managed Exchange Traded Fund focused on the Midstream Oil & Gas MLP space. The managers are Infrastructure Capital Advisors.

+ AMZA is a relatively new ETF which started trading late 2014. The ETF currently yields close to 20%.

+ Over the past 3 months, AMZA achieved 38% total returns compared to 25% for AMLP.

+ A close look at this misunderstood ETF.

Dear Subscribers,

I would like to increase our Portfolio's exposure to the Oil & Gas midstream sector. I have prepared a report on a new ETF - InfraCap MLP ETF (NYSEARCA:AMZA) which currently yields close to 20%. In my opinion, AMZA is set to provide excellent returns over the next couple of years. It is worth to note that this ETF does not issue K-1s. It is set up as a c-corporation and therefore issues a 1099 form, avoiding tax complications.

For our International subscribers: AMZA is a good alternative to investing directly into MLP stocks, as some have reported that they are getting subjected to a large withholding tax on distributions paid by Master Limited Partnerships. Some subscribers from Asian countries informed me that their withholding tax is as high as 40%. AMZA, AMLP and MLPG are all tax efficient products and can be used as an alternative.

Note on the 20% yield: AMZA pays to investors an amount of $2.08/share every year. This comes to 19.7% yield. On certain finance websites, the yield shows as 11.69%. This would be the 12-month trailing SEC yield, which is computed by subtracting any "return of capital" to shareholders (Return of Capital represents unearned returns paid to shareholders in form of distributions). The 11.69% represents the dividends and income earned by AMZA over the past 12 months. AMZA paid some "return of capital" to shareholders in 2015; however no such returns were made during 2016. Therefore the reported SEC yield is not an indicator of actual distributions (which are 19.7%) or of future performance. I expect AMZA to keep outperforming in the future, as it has done over the past 3 months.

Buy Alert



Additional Notes on my article below: I was granted last Friday an exclusive interview with Infrastructure Capital Advisors, the managers of the AMZA ETF. Following my conversation with both the CEO Edward Ryan and the portfolio manager Jay Hatfield, I could judge that the team managing the ETF is professional and competent. They explained to me their strategy in details which I am sharing with subscribers.

The following is the full report.
++++++++++++++++++++++

Outlook for Oil and Gas MLPs

This is a follow up on a recent report posted on Seeking Alpha on the outlook of global oil supply and demand trends over the next 5 years. The report also includes the outlook and valuations for the largest oil & gas MLPs.

The conclusion of the report:"Despite the recent price rally in the oil and gas MLP space, the sector remains severely undervalued. The large MLPs have a 40% to a 75% upside which can be achieved over the next two to three years, in addition to the hefty distribution yields averaging around 10%."

For those who did not get a chance to read it, the following is the link:Master Limited Partnerships - Why The Current Rally Is Just The Beginning

InfraCap MLP ETF is an actively managed Exchange Traded Fund in the Oil & Gas MLP space, managed by Infrastructure Capital Advisors. The Fund is invested primarily in the U.S. midstream energy infrastructure sector.

The ETF is relatively new and started trading on the New York stock exchange in October 2014, around the time when Oil & Gas MLPs were under severe selling pressure. The total assets of this ETF amounted to around $42 million. AMZA trades based on its Net Asset Value (NAV), which is reported on a daily basis by its manager.

The ETF pays $2.08 per share yearly, which gives it a yield close to 20%.

Holdings

This ETF invests primarily in first class oil and gas MLPs with the following characteristics:

1. Investment grade credit.
2. Stress tested to perform well regardless of oil prices.
3. History of earnings growth.
4. History of dividend growth.
5. Full cycle companies which can thrive in different phases of the oil cycle.

If we take a close look at the top holdings of AMZA, we find they are the same as those of the Alerian ETF AMLP (NYSEARCA:AMLP), however the weightings are different. The current top 10 holdings of AMZA are the following:



An actively managed strategy

AMZA is an actively managed ETF. Therefore it provides more added value to investors. The following is the strategy used by its manager to maximize income and growth:

Flexible allocation: AMZA managed to build a model to track MLPs that are undervalued or those with the best upside potential. They have flexibility to allocate investments to those companies that are best poised to outperform. For example they outweigh those companies who will benefit from mergers and acquisitions, or those which become severely oversold. AMZA management increased allocation on Energy Transfer Equity (NYSE:ETE) when the stock collapsed last February to the price of $4/share. ETE trades today close to $13/share. Finally, AMZA has a unique advantage because it can add the General Partners ((GPs)) of MLPs (Parent Companies of MLP companies) to their portfolio holdings. The General Partners also pay high distribution yields and many are not Master Limited Partnerships. GPs are added to the portfolio using an opportunistic strategy.

Use of leverage: AMZA has the flexibility to use leverage with a target of 20% to 25%. The added leverage helps the ETF to capture higher distribution yields paid by the underlying companies. This also enables it to pay shareholders higher distributions.

Writing covered calls: Finally, AMZA management uses a covered-call strategy to boost income. Covered calls can help reduce the ETF volatility during market turbulence. Also covered calls can be a good source of income during period of price stability.

Simplified Tax Accounting

Like AMLP, AMZA is taxed as a c-corporation. Therefore investors get the form 1099 and not K-1. This provides investors with an entry to the oil and gas MLP space without tax complications.

Why did AMZA underperform AMLP in 2015?

The ETF seeks to pay a steady distribution of around $2.08/share per year (current yield 20%) and to keep a stable Net Asset Value (NAV). Based on my analysis, management seeks to achieve this return based on the following 4 sources of income:

1. The distribution yield of the underlying stocks, which currently comes to 9%.
2. A 1.5% extra income from leverage.
3. Writing covered calls, which can possibly achieve around 2% return when the markets are not volatile.
4. It seems that management seeks to fund the shortfall of 6.2% from capital gains achieved on the underlying holdings to shareholders.

At first glance, the strategy used by the ETF seems logical, since most companies held in the portfolio are growing at a rate of 6% or more annually.

However, the fixed distribution, "regardless of the performance of the underlying portfolio", puts the performance of the ETF at risk during severe market downturns. This is exactly what happened in 2015. As the underlying stocks kept falling, the ETF had to sell a part of its holdings at low prices in order to return a steady distribution yield to shareholders. This led to a deterioration of NAV, which is the main reason why AMZA has underperformed AMLP.

Outperformance of the past 3 months

The strategy used by the ETF has finally paid-off. On a total return basis (including dividend reinvestment), AMZA has delivered almost 38% return over the past three months compared to only 25% return by AMLP.



Given the bullish outlook in the midstream oil & gas space, AMZA is likely to continue to deliver stellar results. I expect that the 20% yield paid by AMZA can reasonably be achieved by the fund managers and is unlikely to contribute to a reduction in NAV over a horizon of 2 to 3 years.

Conclusion: AMZA is well positioned for the future

I believe that AMZA started trading in 2014 in the worst environment. Therefore the past performance does not provide a good base for the great potential of this ETF.

AMZA operates best and outperforms when MLP prices are stable or going up. With quite a positive outlook for this space, AMZA is set to continue to outperform and generate additional returns to investors through options writing and through its opportunistic portfolio allocation. I believe owning AMZA in addition to AMLP, or as an alternative to AMLP, is a good strategy as it provides a managed aspect to this sector, and is likely to be a highly profitable investment.

As usual, I will keep you updated with market commentaries including any new "buy alerts" and "sell alerts".

A final note: Your comments and suggestions are always welcome. This helps me improve the service. Feel free to send me an internal message on Seeking Alpha, or contact me directly by email: rmorwa.com

Good investing,

Rida MORWA

Does Rida Morwa pay you a commission? Just curious.

Yup, up and down like a roller coaster... goes up and then he opens his mouth and down it goes again. cycle is getting more frequent lately, will be down below 20,000 by November elections at this rate.

Phil

I alway get a kick out of seeing rida morwa's name.
I believe he was a graduate of The thunderbird global school of management
locally we refer to it as the thunderbird school of international bartending.

I just bought another distressed property, I'm thinking ~35% RTI once I flip it. If the housing markets chits, my RTI will be about 7% renting it. I do have some fixing, painting, and lots of cleanup ahead of me though. My last flip just hit the market, should yield around 30%. Those numbers are excluding my sweat, but it works for me. I love stinky property deals.

BULL MARKET -- Dwyer observed in February that shock drops typically see stocks bounce and then retest the low as volatility begins to decline before moving on to new highs. https://www.marketwatch.com/Story/w...-04-17?&siteid=yhoof2&yptr=yahoo