Rocky’s Weekly Stock Picks
This week is going to be wonderfully boring. Unless, of course, double digit dividends you can count on are your idea of exciting!
FSD - $11.06/share, $0.10/month return. Ex-div 11/1 (Tuesday). It’s possible this changes next year, but unless the Fund ends, we suspect it’ll remain the same. Frankly we don’t worry much about the opening and closing dates of funds.
That’s not say there’s no point in knowing this information, and in fact, your personal financial advisor is almost guaranteed going to tell you that it matters. Here’s our take on it.
When the Fund closes and the shares are bought back, we’re expecting to be satisfied with the share price. This is similar to our take on having options assigned. That is to say, if our shares get bought tomorrow, it will be at a price we are satisfied with.Obviously the share price of a fixed income fund and the strike price of an option are very different things, and nothing is guaranteed…but that’s where your risk management skills come into play.
GPP - $13.25/share, $1.80 annual return paid quarterly. Ex-div 11/3 (Thursday). Operating as an LP (meaning a K-1, and tax-free returns until you ROI), this fuel company has 11 ethanol production facilities. We’ve got some mixed things to say about ethanol, but the fact is it’s not going away.
The company also engages in what most LPs engage in - transportation of fuel. Even if we magically erase ethanol from all existence, those facilities can be repurposed (at no mean expense, unfortunately), and those transportation assets can still transport other fuels.
HMLP^A - $21.65/share, ex-div 11/7 (Monday).$0.54/share per quarter. This preferred stock is cumulative and perpetual, and issues 1099’s instead of K-1’s. The shares are redeemable, but even in that very unlikely event, the coupon price is $25, so….can’t really lose.
This couldn’t be any more of an ideal MLP to get started with. While you will immediately be taxed on your returns, they are qualified. Not having to fuss with a K-1 is an added bonus.
Additionally, no K-1 means no K-3. What’s a K-3? A whole bunch of bulls…..
The explanation of K-3’s are far beyond this article’s scope, and don’t affect us as individual investors.Of course, if you don’t know what a K-3 is and one shows up in your mailbox in the middle of September, you may just have a mild panic attack. Or maybe that’s just our CEO. Now if you’re a business owner of an S-Corp or C-Corp, you’ll be the one sending them out, but…let’s move on.
X - $20.51/share, ex-div 11/4 (Friday), $0.05/share per quarter. United States Steel Corp may not have a huge dividend (slightly more than ACVF), but we feel that it’s a safe spot to park some cash. Maybe just 5 or 6 shares.
We’re expecting the share price to go no lower than $15, no higher than $25, in the next 18 months. Perhaps just go with ACVF (just under $30 at the moment) if you’ve already got money parked in steel or construction. For us, we feel the need to increase our exposure for the sake of balance.
Remember, however, our overall investment plan involves long-term holds. For short-term, high yield plays we prefer options. Speaking of which…
CVNA - $14.50/share, options trade weekly, volatility is currently high. We’re going for a deep ITM call spread. We anticipate that the price will continue to slide down, though much less than it has over the last year.
We aren’t completely certain what’s going on with this company, but it’s not great. Our expectation is that the company itself restructures, or is acquired. In the coming week or two, however, we’re going to do a little bit of old fashioned gambling.What we’re not going to do is buy LEAPs for this symbol. Nuh uh, not doing that. Even if we had the budget and available risk, we’d avoid long-term option plays until the dust settles.
If you’re saying to yourself, “Oh hell yeah, I want some serious risk in my life”, you’d be better off buying OTC pink sheets from Greece. At least then when you lose your investment, you can be satisfied that you did so with huge balls.
