# duc's 'Margin of Safety' investment



## ducati916

So here is my choice:




My total investment will be $10K
My entry price is $5.22.
I have 1530 shares for a total of $7987 [not inc. commissions]
I have a surplus of $2K

This thread will not be particularly active and will simply plod along unless something really dramatic and unforeseen occurs.

So why is there a margin of safety?

1. This is an ETF, there is a portfolio of stocks held in the single security.
2. Any shockers will be replaced by the fund managers.
3.Your risk is therefore controlled to an extent through limited exposure to any 1 stock
4. Any big individual out-performers naturally create an increasing influence on the fund.
5. The ETF is optionable. I can increase my returns via options. On the negative, currently the Options market for this ETF is very thin. I'm hoping that that will change for the better.

Risks not managed.

1. All the stocks are in one industry.
2. I would have preferred greater diversification.
3. If that industry turns to custard, well, so does your ETF.
4. As ETFs go, it is not a huge ETF on a capitalisation basis, I'll keep an eye on this.

Monthly dividend of $0.11/share = $168/month return = 2.2%/month = 25%/year. Therefore in 4yrs you have a total return of your initial investment. This assumes of course the payments do not stop or are reduced. We'll see what happens.

These are pipelines. They are essentially toll takers. The business model is simple. Whether there are any real barriers to entry apart from capital, probably not, but I haven't looked at Federal or State regulations at this point, so that may be helpful to the various businesses in restricting new entrants to the business. However, it's not really a risk as if there was a new entrant and they were wildly successful, if they had common stock, the fund would add their stock.

The Target.

The target is a 1000% return in 5yrs. I'll state up front that anything approaching that will require perfect conditions, viz. a lot of luck.

However, I expect zero luck and therefore to manufacture returns through intelligent investing. This means that I have an expectation that the market will fluctuate. I will capitalise on those fluctuations. This will not be a passive sit and hold exercise. The intention is to grow this investment actively.

jog on
duc


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## luutzu

ducati916 said:


> So here is my choice:
> 
> View attachment 91108
> 
> 
> My total investment will be $10K
> My entry price is $5.22.
> I have 1530 shares for a total of $7987 [not inc. commissions]
> I have a surplus of $2K
> 
> This thread will not be particularly active and will simply plod along unless something really dramatic and unforeseen occurs.
> 
> So why is there a margin of safety?
> 
> 1. This is an ETF, there is a portfolio of stocks held in the single security.
> 2. Any shockers will be replaced by the fund managers.
> 3.Your risk is therefore controlled to an extent through limited exposure to any 1 stock
> 4. Any big individual out-performers naturally create an increasing influence on the fund.
> 5. The ETF is optionable. I can increase my returns via options. On the negative, currently the Options market for this ETF is very thin. I'm hoping that that will change for the better.
> 
> Risks not managed.
> 
> 1. All the stocks are in one industry.
> 2. I would have preferred greater diversification.
> 3. If that industry turns to custard, well, so does your ETF.
> 4. As ETFs go, it is not a huge ETF on a capitalisation basis, I'll keep an eye on this.
> 
> Monthly dividend of $0.11/share = $168/month return = 2.2%/month = 25%/year. Therefore in 4yrs you have a total return of your initial investment. This assumes of course the payments do not stop or are reduced. We'll see what happens.
> 
> These are pipelines. They are essentially toll takers. The business model is simple. Whether there are any real barriers to entry apart from capital, probably not, but I haven't looked at Federal or State regulations at this point, so that may be helpful to the various businesses in restricting new entrants to the business. However, it's not really a risk as if there was a new entrant and they were wildly successful, if they had common stock, the fund would add their stock.
> 
> The Target.
> 
> The target is a 1000% return in 5yrs. I'll state up front that anything approaching that will require perfect conditions, viz. a lot of luck.
> 
> However, I expect zero luck and therefore to manufacture returns through intelligent investing. This means that I have an expectation that the market will fluctuate. I will capitalise on those fluctuations. This will not be a passive sit and hold exercise. The intention is to grow this investment actively.
> 
> jog on
> duc




Is that Amazon?

Would be good to hear why you think Amz is a good business and a great investment at current prices.


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## tech/a

Luutz

It’s an ETF

https://www.google.com/url?sa=t&source=web&cd=4&ved=2ahUKEwil2-20iNDfAhXGvrwKHfddDcUQFjADegQIBhAB&url=https://www.etf.com/AMZA&usg=AOvVaw1DXkgenInfyUQZgTib0-nf


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## luutzu

tech/a said:


> Luutz
> 
> It’s an EFT
> 
> https://www.google.com/url?sa=t&source=web&cd=4&ved=2ahUKEwil2-20iNDfAhXGvrwKHfddDcUQFjADegQIBhAB&url=https://www.etf.com/AMZA&usg=AOvVaw1DXkgenInfyUQZgTib0-nf




Thanks Tech.

Oh yea, I have heard of Electronic Fund Transfer   jk. All these financial products.

It'd be pretty hard to assess these funds though. Don't investors have to look at each one of its holdings?


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## tech/a

Hahaha

All thumbs


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## tech/a

Gotta hand it to Duc

He certainly aims for the stratosphere!

Might put a grand on it for $1,000,000 return!


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## InsvestoBoy

Wow that is pretty hilarious you picked AMZA as "investment grade" with a "margin of safety".

Did you actually do *any* due diligence on this ticker at all?

Two seconds of googling shows this is not a normal ETF but rather a speculative vehicle for the fund managers who apparently suck at their job:
- They employ a covered call strategy and have underperformed the benchmark when they should've outperformed. (As an aside, hilarious that you want to run options on a fund already running options).
- They overweighted an extremely overvalued underlying holding, showing the fund managers can't even employ their own value investing hahah.
- They speculate in energy markets vias USO and UNG ETFs and they suck at it. They were short USO as it moved higher, and as of Nov 3 they were holding a pretty large short in UNG right before UNG rose 46%.

https://seekingalpha.com/article/4217857-problem-infracap-mlp-fund

Apparently it even speculates in other macro markets and were short US Long Bonds via TLT ETF into the recent spike 

https://seekingalpha.com/article/4230192-amza-4-reasons-mlp-etf-strong-sell

hahahahahaha, is this *seriously* your pick to demonstrate value investing in investment grade and margin of safety? 

Do you really actually believe the dividend is 0.11/month hahahahahaha


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## InsvestoBoy

lollll in this interview with AMZA fund manager:
https://seekingalpha.com/article/4230898-infracap-mlp-etf-interview-jay-hatfield


> Technical analysis is employed primarily for evaluating market and sector risk. For instance, when the overall market breaks below its 200-day moving average, usually risk and volatility rise substantially and the risk of sharp market declines rise. In the future, we expect to use this technical analysis to reduce risk by reducing leverage during these periods.




Wowwww sounds like you should definitely invest your money with this goof.


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## ducati916

InsvestoBoy said:


> Wow that is pretty hilarious you picked AMZA as "investment grade" with a "margin of safety".
> 
> Did you actually do *any* due diligence on this ticker at all?
> 
> Two seconds of googling shows this is not a normal ETF but rather a speculative vehicle for the fund managers who apparently suck at their job:
> - They employ a covered call strategy and have underperformed the benchmark when they should've outperformed. (As an aside, hilarious that you want to run options on a fund already running options).
> - They overweighted an extremely overvalued underlying holding, showing the fund managers can't even employ their own value investing hahah.
> - They speculate in energy markets vias USO and UNG ETFs and they suck at it. They were short USO as it moved higher, and as of Nov 3 they were holding a pretty large short in UNG right before UNG rose 46%.
> 
> https://seekingalpha.com/article/4217857-problem-infracap-mlp-fund
> 
> Apparently it even speculates in other macro markets and were short US Long Bonds via TLT ETF into the recent spike
> 
> https://seekingalpha.com/article/4230192-amza-4-reasons-mlp-etf-strong-sell
> 
> hahahahahaha, is this *seriously* your pick to demonstrate value investing in investment grade and margin of safety?
> 
> Do you really actually believe the dividend is 0.11/month hahahahahaha





There are issues with this, accepted.

However, some of the variables that you see as a negative, I have specific reasons for wanting, viz volatility.

The biggest risk are the various strategies employed by the Fund Managers. They are employing derivatives, which increase the volatility, as some pay off, and some don't. This is a mixture of skill and luck. I need them to be at about 50/50. If they can get to that 50/50 mark, this will jump up and down, which is exactly what I'm looking for. I have no illusions that this is going straight up.

Dividends are always at risk of underperformance. Could it be cut/reduced....of course. Until it is however, it is good to have.

jog on
duc


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## Xendragon

No "Margin of Safety" to be seen here so far.


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## ducati916

So a further issue: falling NAV.

Is this an issue, yes, of course it is. Why has it been falling:

(a) in part due to poor or unlucky trading by managers, take your pick; and
(b) a bear market for their assets, as an example:




Stocks go down, stocks go up. Could it fall further [as any of the holdings] of course. Could it go up. Of course. The NAV is far more affected by asset price movement (b) than (a).

Could they [management] completely blow-up the fund? Of course, which is why I limit my total financial exposure to 10K. Do I WANT to lose the 10K...of course not, but, if I do, that is manageable.

Now, assuming that they do not blow up the fund and can limit their derivative trading to a 50/50 scenario, will their assets [stock holdings] fluctuate? The probability is good that they will.

If the NAV rises due to fluctuating assets, will the ETF price fluctuate? It is probable that it will.

Can I make money if it fluctuates....oh yes.

So re. the 'margin of safety'. This ETF is pretty beat up and almost universally hated. For me, that is the ideal starting point, things could get worse, but there is also a very good chance that things improve. The price reflects how beat up this is. The yield, although at risk, will provide excellent returns if the managers can get their s*** together, hell that's 100% in 4yrs, only another 900% to find!

jog on
duc


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## InsvestoBoy

ducati916 said:


> The price reflects how beat up this is. The yield, although at risk, will provide excellent returns if the managers can get their s*** together, hell that's 100% in 4yrs, only another 900% to find!




What? No.

The price does not reflect "beat up", the price reflects actual value destruction caused by the managers investing in overvalued assets and speculating badly in macro markets.

If you look at the second last link I provided, you will see the dividend you keep harping on about is a serious concern and nowhere near as certain as you seem to be banking on.

I can't believe all the hoopla you threw up in the other thread about business analysis compared with how you are talking about this stock.

So far all I can see is you apparently are claiming a "margin of safety" here is:
- investing in a fund managed (very poorly) by others, 
- that the price will fluctuate so you can profit off the fluctuations. 

I thought you were going to pick an actual business.

Quite amusing.


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## ducati916

InsvestoBoy said:


> What? No.
> 
> 1. The price does not reflect "beat up", the price reflects actual value destruction caused by the managers investing in overvalued assets and speculating badly in macro markets.
> 
> 2. If you look at the second last link I provided, you will see the dividend you keep harping on about is a serious concern and nowhere near as certain as you seem to be banking on.
> 
> 3. I can't believe all the hoopla you threw up in the other thread about business analysis compared with how you are talking about this stock.
> 
> 4. So far all I can see is you apparently are claiming a "margin of safety" here is:
> - investing in a fund managed (very poorly) by others,
> - that the price will fluctuate so you can profit off the fluctuations.
> 
> 5. I thought you were going to pick an actual business.
> 
> Quite amusing.




1. Yes it does reflect value destruction, which means that the price has been beaten up. What would you call it.

2. Accepted. However steps have been taken to rectify that problem. Will it work? I have no idea, in theory, yes it should. We will see.

3. The difference is that I am aware of most of the risks and specifically chose to take exposure to them. VC in CZZ had no idea of the risks that he ran.

Is this stock [ETF] carrying more risk than other comparable ETFs? Yes it is. We will see if that is a good thing or a bad thing. 

4. Well then you need to look a little harder.

5. Don't you think this qualifies as a business? If not why not?

jog on
duc


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## So_Cynical

Its hard to be a contrarian, against the common consensus, at first glance AMZA looks to be the kind of stock that interests me, then again management have made some poor decisions over a long time frame and a managed fund is very much only as good as the managers.


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## ducati916

So_Cynical said:


> Its hard to be a contrarian, against the common consensus, at first glance AMZA looks to be the kind of stock that interests me, then again management have made some poor decisions over a long time frame and a managed fund is very much only as good as the managers.




True they have.

Have they learned anything? One would hope so, even if it is to stop actively managing the fund.

jog on
duc


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## ducati916

A few assumptions here:

(a) that the average share price maintains [with fluctuations] $5/share; and
(b) that the dividend of $0.11/month is not reduced/eliminated; then

Reinvesting the dividend, will over that 5yr holding period, take your initial $10K to $30.5K

jog on
duc


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## cynic

tech/a said:


> Gotta hand it to Duc
> 
> He certainly aims for the stratosphere!
> 
> Might put a grand on it for $1,000,000 return!



That would be  100,000% return! I don't think le Duc is aiming quite that high, but don't let me stop you! 
After all, there's nothing quite like watching a duck gopher it!


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## luutzu

cynic said:


> That would be  100,000% return! I don't think le Duc is aiming quite that high, but don't let me stop you!
> After all, there's nothing quite like watching a duck gopher it!




I'm looking at BUffett's investment in the original Washington Post Co.

It returned him over 100,000% over some 40 years. From an initial investment of some $10.7m, ignoring dividends... he sold it for $1.1B. 

Quite impressive that guy.


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## cynic

luutzu said:


> I'm looking at BUffett's investment in the original Washington Post Co.
> 
> It returned him over 100,000% over some 40 years. From an initial investment of some $10.7m, ignoring dividends... he sold it for $1.1B.
> 
> Quite impressive that guy.



I know that many adore WB, but let's not overstate his achievements.
Care to revise your claculation.
According to mine the return was somewhere in the order of 10,000%


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## luutzu

cynic said:


> I know that many adore WB, but let's not overstate his achievements.
> Care to revise your claculation.
> According to mine the return was somewhere in the order of 10,000%




It's only one zero off. So that's nothing


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## Value Collector

Wow, what can I say other than this is just more rediculous stuff for Duc.

He banged on about CZZ having a bit of bank debt, yet now says highly leveraged speculative strategies makes for a margin of safety.

To compare this to the position CZZ was in, and say it has a margin of safety but czz didn’t is nuts.

Keep in mind my ten bagger result with czz was achieved without adding any leverage to it with options, even margin loans weren’t available against czz st the time.

So you may achieve you goal, but if you do kick the goal, it will be the result of speculation, far in excess of any speculation needed for czz to work as an investment. 

Good luck, you will need it.


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## ducati916

Value Collector said:


> Wow, what can I say other than this is just more rediculous stuff for Duc.
> 
> 1. He banged on about CZZ having a bit of bank debt, yet now says highly leveraged speculative strategies makes for a margin of safety.
> 
> To compare this to the position CZZ was in, and say it has a margin of safety but czz didn’t is nuts.
> 
> 2. Keep in mind my ten bagger result with czz was achieved without adding any leverage to it with options, even margin loans weren’t available against czz st the time.
> 
> 3. So you may achieve you goal, but if you do kick the goal, it will be the result of speculation, far in excess of any speculation needed for czz to work as an investment.
> 
> Good luck, you will need it.




1. The leverage employed by AMZA is 20% - 30%. Now that is not insignificant, but if used well [correctly] will enhance returns. Of course the converse is also true, if used badly [incorrectly] will hurt returns. The derivatives position is 1.5% of assets. This is insignificant. No different to CZZ using futures contracts to hedge currency fluctuations.

2. Your 10x was largely made up of:

(a) luck that nothing serious blew-up in the stock, when there were risks barely under control; and
(b) that a merger happened; and
(c) a bull market.

Re. AMZA,  [and my] running a covered call/covered put operation [which isn't really viable yet] hardly qualifies as 'leverage'. Leverage would be buying an outright position in derivatives. So you are incorrect.

Whether a margin loan was available or not, that is not how I will calculate the returns. The starting capital is $10K. The ending result is by the value of that starting $10K. Again, your argument is without merit.

3. Early on in the DK's thread 'Education...' I said to you that intelligent 'timing' of the market will beat 'time-in-the-market', unless a stock just goes straight up. Stocks that go straight up are rare. To get one is lucky. I don't anticipate getting that lucky. I don't need to get any more lucky than the stock:

(a) doesn't blow itself up; and
(b) fluctuates with the market and its underlying assets.

This choice splits very evenly down the middle.

(a) we have an active management, plying a number of strategies, to date, with varying success; and
(b) an underlying portfolio of [pretty good] businesses.

(a) is speculative. I cannot control or predict what management will/will not do. I can keep an eye on what they say they will do and see if they follow through.

(b) is where the margin of safety resides. Here you have underlying assets that have been beaten down and now have prices that reflect a margin of safety in the businesses that they represent. There could well be an upset, hence a portfolio, rather than a single stock. A portfolio provides a buffer against calamity in a single stock.

Since you are a man with lots of time, far more than me at any rate, if you wish, we can go through a stock or stocks held by AMZA and assess just how good bad the stock is. As I am now returning to my wage slavery I will not be able to do this every day, but we will get through them over a 5yr period I'm sure.

We can also debate AMZA's performance directly via their financial statements if you prefer [certainly less work].

Therefore my strategy is to trade around managements decisions, anticipating a 50/50 outcome [some good, some bad] which should cause the stock to fluctuate.

I will also benefit if the underlying assets exit their bear market and enter a neutral period of consolidation and possibly even a bull market. This will also cause fluctuations.

However if you wish to call that speculation, I'm fine with it.

jog on
duc


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## Xendragon

Holdings:
NameHolding Allocation
MPLX LP 14.90%
EQM Midstream Partners LP 13.54%
Energy Transfer, L.P. 13.50%
Enterprise Products Partners L.P. 11.14%
Magellan Midstream Partners, L.P. 7.37%
Plains All American Pipeline, L.P. 7.33%
EnLink Midstream Partners, L.P. 6.12%
Phillips 66 Partners LP 5.59%
BP Midstream Partners LP 5.45%
Andeavor Logistics LP 5.37%
Williams Companies, Inc. 5.08%
Western Gas Partners, LP 4.92%
Marathon Petroleum Corporation 4.89%
Noble Midstream Partners LP 4.54%
ONEOK, Inc. 4.06%
Phillips 66 3.10%
Genesis Energy, L.P. 3.01%
NGL Energy Partners LP 2.20%
NuStar Energy L.P. 2.03%
Western Gas Equity Partners LP 1.42%
Tallgrass Energy LP Class A 1.27%
Antero Midstream Partners LP 1.04%
DCP Midstream LP 0.84%
EQGP Holdings LP 0.71%
Kinder Morgan Inc Class P 0.59%
Shell Midstream Partners LP 0.58%
Crestwood Equity Partners LP 0.50%
TC PipeLines, LP 0.34%
Enable Midstream Partners LP 0.32%
Buckeye Partners, L.P. 0.09%
Holly Energy Partners, L.P. 0.08%
EnLink Midstream LLC 0.03%
BP p.l.c. Sponsored ADR 0.00%
J.P. Morgan Alerian MLP Index ETN 0.00%
OPTIONS -0.21%
U.S. Dollar -31.73%


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## Xendragon

oh btw.


ducati916 said:


> The Target.
> 
> The target is a 1000% return in 5yrs. I'll state up front that anything approaching that will require perfect conditions, viz. a lot of luck.






ducati916 said:


> Reinvesting the dividend, will over that 5yr holding period, take your initial $10K to $30.5K



1000% one minute, 205% The next your math really sux bad..


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## ducati916

Xendragon said:


> oh btw.
> 
> 
> 
> 1000% one minute, 205% The next your math really sux bad..





I think if you read the 2 posts, you'll actually see that I'm talking about (a) total return [1000%] and (b) the contribution of the dividend (i) held as cash or (ii) re-invested.

jog on
duc


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## ducati916

Here is the business plan:




jog on
duc


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## ducati916

Always a little more difficult in real time to judge 'optimal' buy/sell points. Given that AMZA is correlated to the POO, I'll sell 90 shares here at $5.86. This would be in 'anticipation' of some sort of reaction lower should the POO/general market stall at circa $50 level.

PV = $11,505
Cash = $2,540
Shares = 1440

Excludes commissions.

jog on
duc


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## jjbinks

Price heading in the right direction! 



ducati916 said:


> So here is my choice:




Just trying to get the context for your choice. Do you mean this is your choice for multi bagger for the year? What were your other choices?


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## cynic

ducati916 said:


> Always a little more difficult in real time to judge 'optimal' buy/sell points. Given that AMZA is correlated to the POO, I'll sell 90 shares here at $5.86. This would be in 'anticipation' of some sort of reaction lower should the POO/general market stall at circa $50 level.
> 
> PV = $11,505
> Cash = $2,540
> Shares = 1440
> 
> Excludes commissions.
> 
> jog on
> duc



I would be interested to know how you decided on the qty of 90 on this occasion.


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## ducati916

cynic said:


> I would be interested to know how you decided on the qty of 90 on this occasion.




Simply 5% of the position.

jog on
duc


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## ducati916

jjbinks said:


> Price heading in the right direction!
> 
> 
> 
> Just trying to get the context for your choice. Do you mean this is your choice for multi bagger for the year? What were your other choices?




To understand the full context you would need to have a look at the other thread, 'Education of an Investor'.

In short, Value Collector made 10x his money in CZZ.

I was not overly impressed with CZZ as an investment, I labelled it a speculation as I felt it lacked a margin of safety.

This did not go down well.

I was challenged to find an 'investment' with a 'margin of safety'. This was my choice. As you can see from the comments, this choice did not impress those people.

This is for a 5yr holding period in which time I will try to match VC's ten bagger, with a stock [ETF] that is unlikely to go anywhere near $50, but never say never.

I will [attempt] to do this through:

(a) trading the position; and
(b) dividends.

So I would actually like this to retrace back lower, so that I could buy back and add to my position moving forward.

jog on
duc


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## jjbinks

ducati916 said:


> To understand the full context you would need to have a look at the other thread, 'Education of an Investor'.
> 
> In short, Value Collector made 10x his money in CZZ.
> 
> I was not overly impressed with CZZ as an investment, I labelled it a speculation as I felt it lacked a margin of safety.
> 
> This did not go down well.
> 
> I was challenged to find an 'investment' with a 'margin of safety'. This was my choice. As you can see from the comments, this choice did not impress those people.
> 
> This is for a 5yr holding period in which time I will try to match VC's ten bagger, with a stock [ETF] that is unlikely to go anywhere near $50, but never say never.
> 
> I will [attempt] to do this through:
> 
> (a) trading the position; and
> (b) dividends.
> 
> So I would actually like this to retrace back lower, so that I could buy back and add to my position moving forward.
> 
> jog on
> duc



Thanks for explaining.
Have not been following the other thread but might have a look when i get the chance.


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## ducati916

NEW YORK, Jan. 18, 2019 /PRNewswire/ --The InfraCap MLP ETF (AMZA) (the "Fund") has declared a monthly distribution of $0.08 ($0.96 per share on an annualized basis).  The dividend will be paid January 30, 2019 to shareholders of record as of the close of business January 23, 2019.

$0.08 per share ($0.96 per annum) is lowered from the prior rate of $0.11 per share ($1.32 per annum), a rate which had been in place since January 2018.&nbsp; The Fund recently adopted a policy of reviewing the distribution level on a semi-annual basis." The monthly dividend rate of $0.08 per share ($0.96 per annum) is lowered from the prior rate of $0.11 per share ($1.32 per annum), a rate which had been in place since January 2018.  The Fund recently adopted a policy of reviewing the distribution level on a semi-annual basis.

Jay D. Hatfield, Chief Executive Officer of Infrastructure Capital Advisors, commented: "The midstream MLP industry is emerging from a period of financial restructuring.&nbsp; Despite a healthy operating environment, twelve companies reduced their distributions in 2018, resulting in a reduced flow of funds to investors.&nbsp; The cumulative impact of the lowered payments is the key factor driving the fund's distribution reduction."Jay D. Hatfield, Chief Executive Officer of Infrastructure Capital Advisors, commented: "The midstream MLP industry is emerging from a period of financial restructuring.  Despite a healthy operating environment, twelve companies reduced their distributions in 2018, resulting in a reduced flow of funds to investors.  The cumulative impact of the lowered payments is the key factor driving the fund's distribution reduction."

jog on
duc


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## ducati916

So a 27% cut in the dividend reduces my yield to 18%.

jog on
duc


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## ducati916

So just a quick update.

NEW YORK, Jan. 18, 2019 /PRNewswire/ -- The InfraCap MLP ETF (AMZA) (the "Fund") has declared a monthly distribution of $0.08 ($0.96 per share on an annualized basis).  The dividend will be paid January 30, 2019 to shareholders of record as of the close of business January 23, 2019.

So I'll get paid my first dividend in a couple of days. So 1440 * 0.08 = $115.20.

The plan is to re-invest the dividend into stock. I have been looking at the chart and I'm thinking that there could be a fall coming. As (a) I haven't been paid yet, there is no rush to (b) use the money to buy anymore shares. At current prices I'm looking at 19 shares.

It is possible that the ETF retests the lows, circa $5. That would garner 23 shares. A real issue in small trades like this are commissions. If the ETF does fall, then I might also try to hang on for Feb's dividend also, with the assumption that it will hover in that price range for a while. We'll see.

jog on
duc


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## ducati916

So the dividend has been paid. I will now reinvest that dividend tomorrow into additional AMZA shares.

jog on
duc


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## ducati916

Added 19 shares at $5.93

New total: 1459 shares.

jog on
duc


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## qldfrog

ducati916 said:


> Added 19 shares at $5.93
> 
> New total: 1459 shares.
> 
> jog on
> duc



How did you sort out the commission issue..with comsec it would cost me 20usd....


----------



## ducati916

qldfrog said:


> How did you sort out the commission issue..with comsec it would cost me 20usd....





For this exercise I'm not including comms. Not realistic I know, but I can't be bothered accounting for them.

Re. $20, mine are substantially lower.

jog on
duc


----------



## ducati916

Reinvest dividend = $116.72
Buy 22 shares @ $5.81
New total = 1481 shares

jog on
duc


----------



## ducati916

Dividend paid $118.48

Buy 20 shares at $6.01
New total 1501 shares.

jog on
duc


----------



## ducati916

NEW YORK, April 18, 2019 /PRNewswire/ -- The InfraCap MLP ETF (AMZA) (the "Fund") has declared a monthly distribution of $0.08 ($0.96 per share on an annualized basis).  The dividend will be paid April 30, 2019 to shareholders of record as of the close of business April 23, 2019.

jog on
duc


----------



## ducati916

So a little turmoil in the oil market today.

As this ETF is correlated to the oil market, should the POO fall [significantly] I would expect this ETF to follow it. If it should, I will look to replace [buy back] some of those shares I sold previously.

One eye open currently.

jog on
duc


----------



## Value Hunter

Ducati it looks like you are just engaging in speculative trading in and out of a stock.


----------



## ducati916

Value Hunter said:


> Ducati it looks like you are just engaging in speculative trading in and out of a stock.




I'll simply draw your attention to the last paragraph of post #1

_The Target.

The target is a 1000% return in 5yrs. I'll state up front that anything approaching that will require perfect conditions, viz. a lot of luck.

However, I expect zero luck and therefore to manufacture returns through intelligent investing. This means that I have an expectation that the market will fluctuate. I will capitalise on those fluctuations. This will not be a passive sit and hold exercise. The intention is to grow this investment actively.
_
So, yes, I will be trading in and out of the ETF. But that trading will maintain a continuous holding in that ETF. I will also re-invest the dividends while they continue, or until I decide otherwise, which I will disclose.

If you wish in order to score brownie points, want to label it 'speculative', I'm fine with that.

jog on
duc


----------



## Value Collector

ducati916 said:


> Reinvest dividend = $116.72
> Buy 22 shares @ $5.81
> New total = 1481 shares
> 
> jog on
> duc




Keep in mind, I didn’t have to reinvest dividends back into czz to achieve the 10 bagger result, dividends were reinvested into other stocks as I went along.

So if you are going to include reinvested dividends, you will have to earn more than 10x to match CZZ, because czz itself was a ten bagger for me, but the dividends were invested into other things that produce further growth and dividends not accounted for in the 10x result you are trying to match.

Also, if you are ignoring the effect of the trading costs of your operation, You aren’t getting a true result, because I incurred no trading costs through my holding period, my dividends were also fully franked, where as I am guessing you are funding the tax on your dividends from a source outside this experiment, hence inflating the true compounded return of the dividends.


----------



## ducati916

Value Collector said:


> 1. Keep in mind, I didn’t have to reinvest dividends back into czz to achieve the 10 bagger result, dividends were reinvested into other stocks as I went along.
> 
> 2. So if you are going to include reinvested dividends, you will have to earn more than 10x to match CZZ, because czz itself was a ten bagger for me, but the dividends were invested into other things that produce further growth and dividends not accounted for in the 10x result you are trying to match.
> 
> 3. Also, if you are ignoring the effect of the trading costs of your operation, You aren’t getting a true result, because I incurred no trading costs through my holding period,
> 
> 4. my dividends were also fully franked, where as I am guessing you are funding the tax on your dividends from a source outside this experiment, hence inflating the true compounded return of the dividends.




1. Accepted.

2. From what I remember, dividends from CZZ were not particularly high. I stand to be corrected on that point however. I chose AMZA, due in no small part to the [very] high dividend return. If I remember correctly, CZZ's dividend did not play a particularly significant part in your decision to purchase/invest.

3. My trading costs are [very] low, which is why I'm not really accounting for them on the thread.

4. That is a fair point. However, tax structures and their impact were not really at the forefront of the 'challenge', it was more about what is a margin of safety and generating returns. We can discuss the tax law and implications if you wish, but it is a technical area and dry for many.

jog on
duc


----------



## ducati916

Dividend paid $120.08
Buy 21 shares
New Total =1522 shares

jog on
duc


----------



## ducati916

NEW YORK, May 17, 2019 /PRNewswire/ -- The InfraCap MLP ETF (AMZA) (the "Fund") has declared a monthly distribution of $0.08 ($0.96 per share on an annualized basis).  The dividend will be paid May 29, 2019 to shareholders of record as of the close of business May 21, 2019.

jog on
duc


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## ducati916

ducati916 said:


> Dividend paid $120.08
> Buy 21 shares
> New Total =1522 shares
> 
> jog on
> duc




Dividend paid $121.76
New shares buy 22 at $5.36
New Total 1544

jog on
duc


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## ducati916

Buy back my original 90 shares sold @ $5.40

Total Shares = 1634

jog on
duc


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## ducati916

Dividend $130.72
Buy 23 shares @ $5.61

New total = 1657 shares

jog on
duc


----------



## ducati916

NEW YORK, July 19, 2019 /PRNewswire/ -- The InfraCap MLP ETF (NYSE Arca: AMZA) (the "Fund") has declared a monthly distribution of $0.08 ($0.96 per share on an annualized basis).  The distribution will be paid July 30, 2019 to shareholders of record as of the close of business July 23, 2019.

jog on
duc


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## jjbinks

Hi Duc,

great to see that you have been continuing to update this. 
We are now 6 months in and it looks like so far overall return on investment has been flat. (Correct me if I am wrong). 
I know you initially mentioned you would be trading fluctuations. Since March it looks like price has trended down from $6 to 5.30. But I can't see any clear trading opportunities.

Curious to know what opportunities you see from here

Cheers
j


----------



## qldfrog

Thanks for alerting me to that stock,
Quite happy to have bought some, and as ethical as czz


----------



## ducati916

jjbinks said:


> Hi Duc,
> 
> great to see that you have been continuing to update this.
> We are now 6 months in and it looks like so far overall return on investment has been flat. (Correct me if I am wrong).
> I know you initially mentioned you would be trading fluctuations. Since March it looks like price has trended down from $6 to 5.30. But I can't see any clear trading opportunities.
> 
> Curious to know what opportunities you see from here
> 
> Cheers
> j




Well the return on investment has been +/- 9% [dividends] and a little capital appreciation, nothing worth writing home about. The full year will see the 18% yield.

On the chart, yes, flat and no trading opportunities. So far, very boring.

At some point, something will change and sentiment will change with it. We just don't know whether it will be good or bad. The stock will then move. This will provide opportunity. So for the moment, I'll simply sit tight and harvest the dividends.

jog on
duc


----------



## ducati916

qldfrog said:


> Thanks for alerting me to that stock,
> Quite happy to have bought some, and as ethical as czz




This is essentially an infrastructure ETF. Long term it should provide nice steady returns with the odd bit of excitement.

jog on
duc


----------



## ducati916

Bought 25 shares at $5.22

New total = 1682 shares

jog on
duc


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## willoneau

hI DUCATI916, just curious why you didn't pick AU EFT ?


----------



## ducati916

willoneau said:


> hI DUCATI916, just curious why you didn't pick AU EFT ?




The only AU showing [for me] is Ashanti Gold.

Anyway, I picked this for a number of reasons:

i. ETF
ii. High dividend
iii. Potentially high volatility [not the case currently]
iv. Optionable [improving]
v. Anchoring [all time high is circa $27] 

jog on
duc


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## willoneau

Hi ducati916, wasn't it to do with the discussion with Value Investor and that stock that was risky in your opinion which was an AU stock?


----------



## ducati916

willoneau said:


> Hi ducati916, wasn't it to do with the discussion with Value Investor and that stock that was risky in your opinion which was an AU stock?




This ETF was in response to someone, it may have been VC but not sure on that, to pick a stock that had a 'margin of safety' as I had criticised his pick of CZZ which did return him 10X initial investment.

So this was my choice. The challenge is to:

i. Equal or better the 10X return;
ii Over a 5yr holding period.

So this seems a good place to update.

The price is currently sitting at my entry price of $5.22, so in 7 months the price has gone nowhere.

Cash = $2054.04
Stock = $8780.84
Total = $10834.84

So a profit of $834 or 8% +/- which is the dividend return to date. As the options market is developing for this ETF, I'll start looking at increasing the return via trading options additionally.

jog on
duc


----------



## willoneau

I did follow the thread and why you are doing this. I think to include options in this challenge as well isn't really part of it as it was to pick a stock and trade it for 5years wasn't it , Value Investor didn't use options if I remember.
I understood the point you were trying to make , just hate to see you skew this trying to prove it.


----------



## ducati916

willoneau said:


> I did follow the thread and why you are doing this. I think to include options in this challenge as well isn't really part of it as it was to pick a stock and trade it for 5years wasn't it , Value Investor didn't use options if I remember.
> I understood the point you were trying to make , just hate to see you skew this trying to prove it.




Actually what I said to VC was: actively trading a stock will increase the returns to that stock, unless, the stock goes [pretty much] straight up.

CZZ was one of those that went pretty much straight up. They are pretty hard to identify ahead of time. I have never had much luck in identifying one.

So trading the position, which includes trading [buying/selling] options was always going to be part of the strategy. It hasn't been to date simply because the option market for AMZA has been pretty thin. It is however starting to thicken slightly....so now I'll look to increase returns via options.

jog on
duc


----------



## willoneau

So when you said actively trading a stock you include options as part of actively trading that stock?
I thought it meant buying and selling that stock through the 5yr period.


----------



## ducati916

willoneau said:


> So when you said actively trading a stock you include options as part of actively trading that stock?
> I thought it meant buying and selling that stock through the 5yr period.





Absolutely.

It is a way to increase the returns to a stock that you hold for [medium/long term] investment purposes. As I said, unless you are lucky enough or skilled enough to hold only vertical risers, then trading around the stock, options and dividends are the way to juice the returns.

As I'm going to hold this for at least 5yrs, assuming it doesn't implode, then absent it rising vertically,[which to date it hasn't] it will need as much help as possible to reach the 10X hurdle.

At the moment, due to it being the w/e, there are no market figures available for the August expiry. When there are, I'll post whatever I'm thinking of doing or actually do.

jog on
duc


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## ducati916

I have a buy order at $4.35, [should it reach there] for 150 shares.

jog on
duc


----------



## ducati916

So having had a quick look at POO, I'll keep my buy order at $4.35. I had considered buying here, but I'll hang on for another day atm.

jog on
duc


----------



## ducati916

Dividend paid = $134.56

Buy 28 shares with dividend
Buy 200 shares from cash

Total = 228 at $4.77 = $1087.56

New Total 1910 shares.

jog on
duc


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## ducati916

_NEW YORK, Sept. 20, 2019 /PRNewswire/ -- The InfraCap MLP ETF (NYSE Arca: AMZA) (the "Fund") has declared a monthly distribution of $0.08 ($0.96 per share on an annualized basis).  The distribution will be paid September 30, 2019 to shareholders of record as of the close of business September 23, 2019._
_
_
jog on
duc


----------



## systematic

Hi @ducati916

I’m happy to stay out of your thread as I don’t want my post to be unhelpful, but I have to ask, as I’m thoroughly confused.

Firstly, there seems to be another thread this relates to, and I don’t think in familiar with it, so perhaps that’s where I’m going wrong.

Anyway; checking this thread out and based on the title of investing with a margin of safety. Worked my way back through the thread hoping I’d find you defining exactly what you meant by that. Happily, you did, right back in the first post (which is where I should have started, lol). You give 5 criteria, which I’ve listed below.

Now, I don’t consider myself a value investor in the ‘margin of safety’ sense anymore than I consider myself a chartist. However, I do know what the ‘value guys’ mean when they talk about it.

Then I come to your criteria and I’m simply perplexed. Your points are clear enough but they lead to a conclusion that you can’t possibly mean?  I’ll quote, then ask...



ducati916 said:


> *So why is there a margin of safety?*
> 
> 1. This is an ETF, there is a portfolio of stocks held in the single security.
> 2. Any shockers will be replaced by the fund managers.
> 3.Your risk is therefore controlled to an extent through limited exposure to any 1 stock
> 4. Any big individual out-performers naturally create an increasing influence on the fund.
> 5. The ETF is optionable. I can increase my returns via options. On the negative, currently the Options market for this ETF is very thin. I'm hoping that that will change for the better.




Okaaaay.

Your definition of why this has a margin of safety (points 1 through 4) are simply...that it’s an ETF(!)

Said another way, virtually any ETF qualifies as a ‘margin of safety’ investment if I use your criteria 1 through 4. If you can get options on it, it qualifies under criteria 5 as well. 

Therefore, to invest with a margin of safety...just buy ETF’s!

Am I wrong? 

We can go through each of your criteria individually, but it shouldn’t be necessary. They clearly lead to the conclusion that any ETF qualifies. Unless you meant something completely otherwise to what you wrote?

This is so far removed from what is meant by a margin of safety that I thought you couldn’t have meant this. But your points are so clear that I had to ask. I was too curious not to. 

Hopefully this is not unhelpful though. There must be others who’ve thought the same thing, so it might help to clarify for a few of us.


----------



## ducati916

systematic said:


> Hi @ducati916
> 
> I’m happy to stay out of your thread as I don’t want my post to be unhelpful, but I have to ask, as I’m thoroughly confused.
> 
> Firstly, there seems to be another thread this relates to, and I don’t think in familiar with it, so perhaps that’s where I’m going wrong.
> 
> Anyway; checking this thread out and based on the title of investing with a margin of safety. Worked my way back through the thread hoping I’d find you defining exactly what you meant by that. Happily, you did, right back in the first post (which is where I should have started, lol). You give 5 criteria, which I’ve listed below.
> 
> Now, I don’t consider myself a value investor in the ‘margin of safety’ sense anymore than I consider myself a chartist. However, I do know what the ‘value guys’ mean when they talk about it.
> 
> Then I come to your criteria and I’m simply perplexed. Your points are clear enough but they lead to a conclusion that you can’t possibly mean?  I’ll quote, then ask...
> 
> 
> 
> Okaaaay.
> 
> Your definition of why this has a margin of safety (points 1 through 4) are simply...that it’s an ETF(!)
> 
> Said another way, virtually any ETF qualifies as a ‘margin of safety’ investment if I use your criteria 1 through 4. If you can get options on it, it qualifies under criteria 5 as well.
> 
> *Therefore, to invest with a margin of safety...just buy ETF’s!*
> 
> Am I wrong?
> 
> We can go through each of your criteria individually, but it shouldn’t be necessary. They clearly lead to the conclusion that any ETF qualifies. Unless you meant something completely otherwise to what you wrote?
> 
> *This is so far removed from what is meant by a margin of safety that I thought you couldn’t have meant this. But your points are so clear that I had to ask. I was too curious not to. *
> 
> Hopefully this is not unhelpful though. There must be others who’ve thought the same thing, so it might help to clarify for a few of us.





I have highlighted your summary and issue.

This thread, as you suspected, was a continuation of another thread. Hence my 'definition' of a margin of safety is somewhat truncated. Be that as it may, an ETF is still, as a standalone criteria, capable of meeting many of the requirements of a full definition of a margin of safety.

This was the thread: https://www.aussiestockforums.com/threads/the-education-of-an-investor.34402/

Other criteria would be that it offered 'value'. Without going into how one might calculate value, suffice to say, that you would need to look at the stocks that formed the ETF and gauge their individual values to come to any valuation (this particular ETF was constituted from MLP's, which had, as a sector taken a beating).

So 'any' ETF would not (on that basis) fulfil the definition of the margin of safety. As a generalisation however, I like ETFs because you can hold a single security and have the diversification of more than one security (outside of the provider risk etc) which is part of the definition (or concept of) margin of safety.

So in answer to your question: no an ETF is not the only thing required, but, it is (for me) a good starting point.

jog on
duc


----------



## systematic

Thanks duc,

Okay, that makes a bit more sense now.  You've ascertained (by whatever method, like you said - that's not the point here) that the constituents of the ETF, in aggregate are at a value price (for you).  Phew!  

Value investors of course invest in any number of structures...not just straight, ordinary shares. So I had no problem with an ETF.  Just that the criteria listed in the first post defined ETF's as a margin of safety (whereas they're not - only in the sense of offering diversification, but you do that anyway with individual equities).  
So the constituents of this ETF, in aggregate at least (if not each, individually) are below what you would assess as a fair price.  Cool.

Appreciate the clarification.


----------



## ducati916

Dividend = $152.80

Buy 31

New Total = 1941

jog on
duc


----------



## ducati916

Dividend paid $155.28

Buy 34 shares @ 4.52

New Total = 1975

jog on
duc


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## ducati916

Dividend paid $158
Buy 39 shares @ $4.04

New total = 2014

jog on
duc


----------



## ducati916

So just a bit of an update (as the ETF has gone relentlessly down since purchase) of the current situation.

Initial capital at risk = $10K
Current value = $8136.56
Cash = $1087

Total value = $9223.56

Loss of $766.44 or 8% +/-

jog on
duc


----------



## barney

Thanks for the updates Duc.  What is the ticker code for the ETF?


----------



## qldfrog

From memory amza


----------



## ducati916

barney said:


> Thanks for the updates Duc.  What is the ticker code for the ETF?





AMZA

jog on
duc


----------



## ducati916

Dividend paid $161.12: buy 35 shares @ $4.65

New total 2049

jog on
duc


----------



## ducati916

Dividend paid $122.94

Buy 30 shares at $4.01

New total = 2079

jog on
duc


----------



## ducati916

ducati916 said:


> Dividend paid $122.94
> 
> Buy 30 shares at $4.01
> 
> New total = 2079
> 
> jog on
> duc





I've put an order in for 700 @ $1.35. I'll see if it executes when the market opens.

jog on
duc


----------



## ducati916

So AMZA never traded that low.

So purchase 500 at $1.51 of which $124.74 was dividend reinvestment.

New total: 2579

jog on
duc


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## ducati916

Dividend paid $77.37

Buy 77 shares.
New Total 2656

jog on
duc


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## ducati916

_NEW YORK, April 17, 2020 /PRNewswire/ -- The InfraCap MLP ETF (NYSE Arca: AMZA) (the "Fund") has declared a monthly distribution of $0.25 per share ($3.00 per share on an annualized basis).  This rate compares to a monthly rate of $0.03 per share paid in the prior month ($0.30 per share on a split-adjusted basis), which was paid prior to the Fund completing a 1-for-10 reverse split.  The distribution will be paid April 28, 2020 to shareholders of record as of the close of business April 21, 2020._

jog on
duc


----------



## qldfrog

How is amza going for you @ducati916 ?
Added a few last week after the price fall..still see a long term annuity like potential for this
Oil and gas will still power the US for the next decades.


----------



## ducati916

qldfrog said:


> How is amza going for you @ducati916 ?
> Added a few last week after the price fall..still see a long term annuity like potential for this
> Oil and gas will still power the US for the next decades.




Anything oil/gas related is hated and cheap currently. If this is not the bottom for the industry, then I don't know what a bottom would look like.

Going forward, the current conditions will squeeze all the competition out of the market. What is left will become very profitable. As AMZA simply holds a basket of stocks, I like this a lot going forward.

Would I like to be buying my initial position now? Of course, but, that's just how it goes sometimes. I'll post an update once this dividend is paid and I purchase further stock. It is actually not as bad as you might initially think.

jog on
duc


----------



## qldfrog

was definitively not teasing you on this one:I lost a bucket average purchase price 51$ vs current $11
got a bit of distribution but still down to 30% of initial capital outch


----------



## ducati916

qldfrog said:


> was definitively not teasing you on this one:I lost a bucket average purchase price 51$ vs current $11
> got a bit of distribution but still down to 30% of initial capital outch




Indeed.

But due to its structure (MLP) it has to distribute its income. At the moment the income is down. But as the oil patch improves (paradoxically the oil bust is the best thing that could have happened) due to bankruptcies, lock-ins, etc, so income and distributions will rise. Use the current distributions to add shares: 5 here, 10 there, all makes a difference going forward.

jog on
duc


----------



## Value Hunter

Oil is somehwere near a cyclical low and of course there will be a cyclical bounce higher in the next few years so if you just want to trade the cyclical bounce there may be an opportunity.

But long-term oil and gas are declining industries. Every year the technology for renewable energies improve and they become cheaper and cheapr to produce. At the rate we are going most oil and gas supply will be uneconomical in another 10 - 15 years. The writing is on the wall.


----------



## ducati916

Value Hunter said:


> 1. Oil is somehwere near a cyclical low and of course there will be a cyclical bounce higher in the next few years so if you just want to trade the cyclical bounce there may be an opportunity.
> 
> 2. But long-term oil and gas are declining industries. Every year the technology for renewable energies improve and they become cheaper and cheapr to produce. At the rate we are going most oil and gas supply will be uneconomical in another 10 - 15 years. The writing is on the wall.




1. Probably true.

2. Renewables are currently a (bad) joke, based I must admit on a fairly limited amount of research. But based on that (limited) amount of research, I do not see oil/gas being 'replaced' by renewables as they exist today, ever. Now if something 'new' pops up, I'll reserve my right to amend my position.

jog on
duc


----------



## ducati916

Once I receive May's dividend (already have April's) I'll re-invest (bi-monthly going forward) them.

jog on
duc


----------



## ducati916

So some good news for AMZA:




jog on
duc


----------



## ducati916

InfraCap MLP ETF (NYSEARCA:AMZA) declares $0.24/share monthly dividend, in line with previous.

Forward yield 17.13%

Payable July 28; for shareholders of record July 21; ex-div July 20.

jog on
duc


----------



## ducati916

So an update:

Shares: 266
Cash: $574.56
Total: $6040.86
	

		
			
		

		
	







So still underwater by some 40%. So this is the start of year 3 out of 5.

jog on
duc


----------



## ducati916

So I haven't updated for a while:




I've sold some shares today. 

I'll come back with a fuller update later.


jog on
duc


----------



## ducati916

Quick update:

Shares: 287
Cash: $1,205.96



Starting capital $10,000
Current value: $8,403.36
Cash: $1.205.96

Total: 9,609.32

jog on
duc


----------



## ducati916

Update:




Starting Capital $10,000
Current Equity Value: Shares #306 = $9201.42
Cash: $1,407.67

Total: $10,609.09

So now showing a small profit. Taken some time. From Jan 2019 to today. The challenge was I think for 5yrs. That means 2yrs to go.

jog on
duc


----------



## ducati916

Starting Capital $10,000
Current Equity Value: Shares #366 = $11, 635
Cash: $1,427.54

Total: $13,062.54




It will run until 2023.

With energy where it is currently, should continue to do well.



jog on
duc


----------

