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Berkshire Hathaway Inc. Message Board

  • WEB_Copycat WEB_Copycat Jun 19, 2002 3:53 PM Flag

    My blood in the streets. Energy stocks.

    A couple of months ago (or so), I thought that the energy stocks reflected blood on the street and I bought several of them. So far, I must admit, my blood has added to others' blood and the energy world has become bloodier. While I did not buy preferreds (WMB) as some of you suggested, I bought WMB (which may go under), I bought AES (which may go under), I bought CPN (which may go under), I bought DUK and KMP (which are down but not likely to go under). I also bought EP today and I may have another energy company or two in my portfolio as "cheap and in trouble" is what I bought.

    I feel that I will be "okay" and should buy more. Any suggestions? While these companies are in trouble, they should be okay in a year or two. I do hope that none goes under. That is my thinking - high expected returns because risk is high (but not so high because I am buying a bunch of junky ones). Oh well, it sounds stupid sometimes but we shall see after two years.

    Any suggestions will be preferred. Please do not abuse me - you may suggest for bloody companies if you think that they are okay.

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    • ill offer some advice on the timing of these stocks cuz i am looking at them as well. what you want to do is wait for them to divest themselves of the derivative contracts they have or might be a party to that relate to energy trading. it is those contracts that blow up when there debt ratings are downgraded and that is why wmb, ila, dyn and the group are trying to sell assets to stop the credit trigger blow ups.

      if you follow tyco it was safe to say that stock was not going to go up until they could get rid of cit before its debt was downgraded. it doesnt matter what they sell it for as long as they get rid of it before the downgrade which they are now going to get to do. the stock went up 3 points on that announcemnt. i think the same dyanmics apply to the energy trading companies.

    • Yes, I too am scouting out the energy sector. Unfortunately I don't have lots of dough so I must concentrate my holdings. I used to own KMP but traded it in for KMI which is the General Partner of KMP. I am also watching the preffered El Paso shares (EPG.P) which have a huge 8% yield. If you are going to dabble in energy and you have aot of cash and have a tax man, buy Master Limited Partnerships like KMP, NBP, TPP, TCLP, SXL, VLO, WEG, EPD, EPN.... They have nice fat yields, are stodgy utility like companies that have slow growth but steady assets like pipelines and terminals. I ampatiently watching Dynegy with its 1.5 billion dollar NNG pipeline. Northern Natural Gas is a huge cash cow and should help Dynegy recover.

 
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