A great deal of successful marketing today depends on closely understanding consumer behavior. As a marketer, you may always be curious to understand what excites or motivates your customers into buying either your products or those of your competitor. Depending on the buying and consumption cycle of your product, there can be several factors that will determine the sales conversion ratio for your product.
Toward Right Learning
A successful sale happens when your customer understands his need and is convinced that your product can satisfy that need in a reliable way. Both these steps happen through a process, which is known as learning. Hence as a marketer, your job begins by ensuring that the customer perceives his need and, more importantly, finds the solution in your product
Right Learning and Right Conversations
At this very moment, you may be reading this article on your laptop or desktop. Remember the day when you had decided to buy your first computer. You must have considered many factors before finalizing which computer to purchase. One of the important decision points for a buyer is his circle of reference. It is natural for you, as a buyer, to discuss with your informed friends about the best brand. Positive references from friends and acquaintances help one make a decision.
How has Facebook changed all of this?
Research has shown that buyers do a great deal of product research on the Internet and most of the time choose to purchase the product either online or offline. The power of the Internet as a research and information resource has been realized to a great extent by customers worldwide.
The basics of consumer behavior, learning, reference groups, and buying decisions have remained exactly the same. But what has changed significantly is the speed with which everything happens. Technology has brought down the barriers in global communication. Social networking sites, and more importantly the rising popularity of Facebook, bears a strong testimony to the growing power of the Internet as a mode of communication and a source of information.
Before and After Facebook
Like we discussed, most of the learning before the proliferation of Facebook and social media happened through advertisements on television. During the days of conventional media dominance, marketing was driven by the power to broadcast. Marketing communication was primarily unidirectional through blaring advertisements and press releases.
Word of mouth happened on a one-on-one basis, where the conversation would begin and end around a small group of people. Today, a search on your favorite brand on Facebook may reveal many conversations about the brand, which may depict user’s positive or negative experiences with the brand. Unlike the clandestine brand gossip of earlier days, the Facebook era ensures that conversations are documented and made easily available through social networking sites.
Brands trying to ignore this new medium find themselves in a state similar to an ostrich, with its head buried in sand, thinking the world cannot see it. The real image of the brand in people’s minds shows up aloud these days through conversations on Facebook.
These dumb kids on Facebook made $119,833.57
Facebook and Online Reputation
The power of Facebook, as discussed, has extended the scope of Word of Mouth beyond the good old conversation between friends. Today, each and every Facebook user is free to publish his views on your brand. The true effect of this happens whenever these conversations appear in searches and influence people’s opinion about the brand image. This is where online reputation, primarily on a widely accepted medium like Facebook, matters.
In a nutshell..
Managing a positive image of your brand requires you to expand your reach, more than what you would do in case of conventional media. The conversational nature of social networking sites, such as Facebook, demands a different approach. Unlike one-time broadcast by the conventional medium, Facebook stores each and every conversation and makes it available through the search option for anyone who is curious to know more about your brand.
That is the reason why it is a critical part of any brand plan to feature positively on social networking sites, such as Facebook. Engaging consultants who have experience in managing brands through the new era of social networks is a growing practice that can help brands manage the new wave.
Get more information here for the best Facebook training available.
Friday, November 19, 2010
Tuesday, November 16, 2010
Facebook and Social Media - The Next Marketing Opportunity
Marketing as an activity is all about reaching the right customers with the right products, and the result sought is delighted customers who are more than willing to open their purses wide enough to boost your revenues. For many years, marketers stalked their target customers through various means and by trying to get their message across to spread awareness about their wares.
Traditional Means of Communication
Traditionally, marketing communications were conducted via print, broadcast and such traditional media through disruptive advertising, where advertisements appear in between the content of interest for the customer.
Traditional media does give a large reach to a marketer with its programming of mass appeal. However, the wastage is equally high, since a large portion of the audience would belong to a different segment than the one that is to be targeted by the marketer.
Enter Social Media and the Internet
The revolution stirred by the internet as a medium took place because of the fact that it is highly personalized and provides more content on-demand than any other available medium. Social sites proliferated far and wide in their usage for a few simple reasons:
The power to create and distribute content is equally available to every user, irrespective of him/her being a customer or a marketer. In the earlier forms of media, that power rested with the editorial staff of the channel or the advertiser, but hardly ever with the user.
The medium is completely personalized, and a user can create or join groups and further create content based on what he/she likes.
Opinions are free and fair. This is one reason why social media is of utmost concern to marketers, since buying decisions are no more influenced as much by advertisements. The traditional word-of-mouth marketing approach has grown leaps and bounds on social networks.
Facebook – At the Center of Social Media
With 500 million (and growing) unique users worldwide, Facebook is the number one social networking site in terms of activity and subscriptions. What started as a garage initiative by Mark Zuckerberg has now become the biggest phenomenon on the internet.
A user interface that allows for quick communication and the ability to create fan pages and groups at the click of a mouse button are what make Facebook extremely popular. Another important reason for its immense popularity is the wide variety of social applications that have been developed and made available within the Facebook environment.
These applications can allow users and friends to do joint activities like playing games that run endlessly, sharing photos, videos, and web links, and many more.
How does this help a marketer?
Traditionally, media plans were drawn to include television channels, publications, or any other media that can grab maximum eyeballs and effectively reach a selected target audience. The science of segmentation and targeting has become only more accurate in the case of social media.
Facebook provides a wide variety of avenues to communicate with the audience, which opens up an entirely different world of possibilities to have a fruitful dialogue with customers. Some of these methods used popularly by marketers are:
Get more information here for the best Facebook training available
Advertising: The first opportunity, which is the most obvious one, is advertising on Facebook. The difference, however, is the fact that you can create your own advertisement in a matter of minutes and also specify the details of your target group in terms of demographics and types of discussions where you want your advertisement to appear.
Fan Pages: Facebook allows every brand, as well as individual users, to create fan pages for their favorite celebrities and their own homegrown businesses. Large brands have also created their official pages on Facebook that have a huge, immediate fan following around the world. The fan page has immense utility to convey first hand information about the brand and also to collect immediate and frank feedback from your customers.
Branded applications: One of the most effective ways to engage a user toward your brand is by creating an application; this could be a game or a contest, with your branding coming across subtly through it.
What makes Facebook even more exciting is the way it allows you to target your communication sharply just to the customer segment you want to attract. It also provides analytics and page insights that give good feedback and measurement on the activity done.
The options provided by Facebook can be creatively explored and used judiciously for bringing about maximum benefits to any brand.
However, while doing all this, you need to be aware of the fact that customers have an equal say and have the ability to respond immediately to any of your actions with a thumbs up or a thumbs down. Availing the service of a social media consultant to work out a social media strategy may be required so that your efforts will not be in vain.
Get more information here for the best Facebook training available
Traditional Means of Communication
Traditionally, marketing communications were conducted via print, broadcast and such traditional media through disruptive advertising, where advertisements appear in between the content of interest for the customer.
Traditional media does give a large reach to a marketer with its programming of mass appeal. However, the wastage is equally high, since a large portion of the audience would belong to a different segment than the one that is to be targeted by the marketer.
Enter Social Media and the Internet
The revolution stirred by the internet as a medium took place because of the fact that it is highly personalized and provides more content on-demand than any other available medium. Social sites proliferated far and wide in their usage for a few simple reasons:
The power to create and distribute content is equally available to every user, irrespective of him/her being a customer or a marketer. In the earlier forms of media, that power rested with the editorial staff of the channel or the advertiser, but hardly ever with the user.
The medium is completely personalized, and a user can create or join groups and further create content based on what he/she likes.
Opinions are free and fair. This is one reason why social media is of utmost concern to marketers, since buying decisions are no more influenced as much by advertisements. The traditional word-of-mouth marketing approach has grown leaps and bounds on social networks.
Facebook – At the Center of Social Media
With 500 million (and growing) unique users worldwide, Facebook is the number one social networking site in terms of activity and subscriptions. What started as a garage initiative by Mark Zuckerberg has now become the biggest phenomenon on the internet.
A user interface that allows for quick communication and the ability to create fan pages and groups at the click of a mouse button are what make Facebook extremely popular. Another important reason for its immense popularity is the wide variety of social applications that have been developed and made available within the Facebook environment.
These applications can allow users and friends to do joint activities like playing games that run endlessly, sharing photos, videos, and web links, and many more.
How does this help a marketer?
Traditionally, media plans were drawn to include television channels, publications, or any other media that can grab maximum eyeballs and effectively reach a selected target audience. The science of segmentation and targeting has become only more accurate in the case of social media.
Facebook provides a wide variety of avenues to communicate with the audience, which opens up an entirely different world of possibilities to have a fruitful dialogue with customers. Some of these methods used popularly by marketers are:
Get more information here for the best Facebook training available
Advertising: The first opportunity, which is the most obvious one, is advertising on Facebook. The difference, however, is the fact that you can create your own advertisement in a matter of minutes and also specify the details of your target group in terms of demographics and types of discussions where you want your advertisement to appear.
Fan Pages: Facebook allows every brand, as well as individual users, to create fan pages for their favorite celebrities and their own homegrown businesses. Large brands have also created their official pages on Facebook that have a huge, immediate fan following around the world. The fan page has immense utility to convey first hand information about the brand and also to collect immediate and frank feedback from your customers.
Branded applications: One of the most effective ways to engage a user toward your brand is by creating an application; this could be a game or a contest, with your branding coming across subtly through it.
What makes Facebook even more exciting is the way it allows you to target your communication sharply just to the customer segment you want to attract. It also provides analytics and page insights that give good feedback and measurement on the activity done.
The options provided by Facebook can be creatively explored and used judiciously for bringing about maximum benefits to any brand.
However, while doing all this, you need to be aware of the fact that customers have an equal say and have the ability to respond immediately to any of your actions with a thumbs up or a thumbs down. Availing the service of a social media consultant to work out a social media strategy may be required so that your efforts will not be in vain.
Get more information here for the best Facebook training available
Thursday, October 21, 2010
Fight Corporate Offshoring of U.S. Jobs - Free Trade = Job Loss
Corporate offshoring of American jobs to low-wage countries has become one of the defining issues of the 2010 elections.
Even The Wall Street Journal—not exactly a cornerstone of the supposed “liberal media”—just published a survey with some revealing results about who and what is to blame for our nation’s poor economy:
86% of Americans believe that offshoring of jobs by U.S. companies contributed to our sluggish economy.
Nearly 7 out of 10 people—an all time high—say that “free trade” agreements with other countries cost us jobs here at home.
Over three-quarters of Americans consider corporate profit-seeking a factor in the downturn.
This is not news to you, or to Public Citizen. Time and time again, we have proven that flawed trade policies and blind corporate greed are eroding the U.S. economy.
Now, our Global Trade Watch team has launched an innovative, interactive website to give you the knowledge to be a more informed voter by seeing the full impact the corporate pursuit of profits has on jobs, the environment and our communities.
Check out Public Citizen’s Trade Data Center.
This powerful new tool is just the latest example of the tremendous amount of research, education and advocacy that Public Citizen does to expose and counteract policies that benefit mega-corporations at the expense of We, the People.
This powerful new tool is just the latest example of the tremendous amount of research, education and advocacy that Public Citizen does to expose and counteract policies that benefit mega-corporations at the expense of We, the People.
Lost jobs. Corporate greed. Of course these are the issues you care about. And Nobody is more committed to reforming the failed trade regime and challenging runaway corporate power than Public Citizen.
With your support, Public Citizen can continue developing resources like the Trade Data Center and fighting for policies that benefit all of us, not just the multinationals.
Onward!
Robert Weissman, President
To get regular e-alerts about opportunities for activism and other ways to help with Public Citizen's work, sign up for the Public Citizen Action Network.
Even The Wall Street Journal—not exactly a cornerstone of the supposed “liberal media”—just published a survey with some revealing results about who and what is to blame for our nation’s poor economy:
86% of Americans believe that offshoring of jobs by U.S. companies contributed to our sluggish economy.
Nearly 7 out of 10 people—an all time high—say that “free trade” agreements with other countries cost us jobs here at home.
Over three-quarters of Americans consider corporate profit-seeking a factor in the downturn.
This is not news to you, or to Public Citizen. Time and time again, we have proven that flawed trade policies and blind corporate greed are eroding the U.S. economy.
Now, our Global Trade Watch team has launched an innovative, interactive website to give you the knowledge to be a more informed voter by seeing the full impact the corporate pursuit of profits has on jobs, the environment and our communities.
Check out Public Citizen’s Trade Data Center.
This powerful new tool is just the latest example of the tremendous amount of research, education and advocacy that Public Citizen does to expose and counteract policies that benefit mega-corporations at the expense of We, the People.
This powerful new tool is just the latest example of the tremendous amount of research, education and advocacy that Public Citizen does to expose and counteract policies that benefit mega-corporations at the expense of We, the People.
Lost jobs. Corporate greed. Of course these are the issues you care about. And Nobody is more committed to reforming the failed trade regime and challenging runaway corporate power than Public Citizen.
With your support, Public Citizen can continue developing resources like the Trade Data Center and fighting for policies that benefit all of us, not just the multinationals.
Onward!
Robert Weissman, President
To get regular e-alerts about opportunities for activism and other ways to help with Public Citizen's work, sign up for the Public Citizen Action Network.
Tuesday, October 19, 2010
A Really Bad Day for Maliki, the Prime Minister of Iraq
No matter how bad a day you’re having, it’s probably not as bad as the day Nouri al-Maliki is having.
Maliki is the prime minister of Iraq. He wants very much to remain prime minister of Iraq, but he’s having trouble forming a coalition that can make up a majority of parliament. He’s been trying ever since indecisive elections last March -- seven months ago -- a world record, the BBC reckons.
You knew the job was dangerous when you took it…
On a visit to Tehran today, Maliki was told he must “get rid of America” and the 50,000 remaining U.S. troops in his country. So said Iran’s Supreme Leader, Ayatollah Ali Khamenei.
He’s the real power in Iran, in contrast to the blowhard president Mahmoud Ahmadinejad, who grabs all the headlines but doesn’t even command the military.
Maliki will take this seriously. For one thing, he lived in exile in Iran during Saddam Hussein’s rule. On the other hand, he’s well aware he wouldn’t be prime minister now if the United States had never invaded Iraq. It’s hard to serve two masters.
Now he has to make a choice. Two weeks ago, Iran convinced another faction in Iraq to back Maliki’s bid to remain prime minister. It happens that Washington insists this faction be kept out of the coalition because it insists on the departure of U.S. troops.
Maliki’s 4½-year balancing act between the United States and Iran is coming to a head. This is the choice he now faces…
Side with Iran and form a viable governing coalition
Side with the United States and allow a seven-month crisis to drag into perpetuity, undermining his legitimacy among ordinary Iraqis
No. 1 seems like a slam-dunk. It’s an outcome Washington won’t like but nonetheless can live with. The Bush administration already negotiated an agreement under which all the U.S. troops are gone by the end of next year. That gives the current administration political cover.
Still, come the end of next year, we can just imagine the cries: “Who lost Iraq?” That is, how did the U.S. invasion manage to strengthen Iran’s hand in the Middle East?
We won’t wade into that political thicket. We’ll just note that Iran sees itself as a sort of godfather to all Shia Muslims. And now they’re allied with an oil-rich country next door where 60% of the population is Shia.
“Iran's Shia influence,” says Byron King, “has spilled across the border into southern Iraq. Southern Iraq is where you'll find six of Iraq's eight ‘supergiant’ oil fields. It's also where you'll find a key border with Shia Islam's mortal enemy -- Saudi Arabia.”
If that sounds like a recipe for conflict, you’re right. It could easily push oil to $125 a barrel… and, if it really spirals out of control, $200 or more. Byron paints an all-too-believable scenario in a fully revised and updated version of his presentation on the subject. He also shows you how to safeguard your investments when the day comes.
Regards,
Addison Wiggin
The 5 Min. Forecast
Thank you for reading The 5 Min. Forecast! We greatly value your questions and comments. Please send all feedback to 5minforecast@agorafinancial.com
Maliki is the prime minister of Iraq. He wants very much to remain prime minister of Iraq, but he’s having trouble forming a coalition that can make up a majority of parliament. He’s been trying ever since indecisive elections last March -- seven months ago -- a world record, the BBC reckons.
You knew the job was dangerous when you took it…
On a visit to Tehran today, Maliki was told he must “get rid of America” and the 50,000 remaining U.S. troops in his country. So said Iran’s Supreme Leader, Ayatollah Ali Khamenei.
He’s the real power in Iran, in contrast to the blowhard president Mahmoud Ahmadinejad, who grabs all the headlines but doesn’t even command the military.
Maliki will take this seriously. For one thing, he lived in exile in Iran during Saddam Hussein’s rule. On the other hand, he’s well aware he wouldn’t be prime minister now if the United States had never invaded Iraq. It’s hard to serve two masters.
Now he has to make a choice. Two weeks ago, Iran convinced another faction in Iraq to back Maliki’s bid to remain prime minister. It happens that Washington insists this faction be kept out of the coalition because it insists on the departure of U.S. troops.
Maliki’s 4½-year balancing act between the United States and Iran is coming to a head. This is the choice he now faces…
Side with Iran and form a viable governing coalition
Side with the United States and allow a seven-month crisis to drag into perpetuity, undermining his legitimacy among ordinary Iraqis
No. 1 seems like a slam-dunk. It’s an outcome Washington won’t like but nonetheless can live with. The Bush administration already negotiated an agreement under which all the U.S. troops are gone by the end of next year. That gives the current administration political cover.
Still, come the end of next year, we can just imagine the cries: “Who lost Iraq?” That is, how did the U.S. invasion manage to strengthen Iran’s hand in the Middle East?
We won’t wade into that political thicket. We’ll just note that Iran sees itself as a sort of godfather to all Shia Muslims. And now they’re allied with an oil-rich country next door where 60% of the population is Shia.
“Iran's Shia influence,” says Byron King, “has spilled across the border into southern Iraq. Southern Iraq is where you'll find six of Iraq's eight ‘supergiant’ oil fields. It's also where you'll find a key border with Shia Islam's mortal enemy -- Saudi Arabia.”
If that sounds like a recipe for conflict, you’re right. It could easily push oil to $125 a barrel… and, if it really spirals out of control, $200 or more. Byron paints an all-too-believable scenario in a fully revised and updated version of his presentation on the subject. He also shows you how to safeguard your investments when the day comes.
Regards,
Addison Wiggin
The 5 Min. Forecast
Thank you for reading The 5 Min. Forecast! We greatly value your questions and comments. Please send all feedback to 5minforecast@agorafinancial.com
Wednesday, October 13, 2010
Save the U.S. Senate from Corporate Domination Sponsored by Republicans
There's no point in sugarcoating this: If the election were held today, Republicans and their corporate benefactors would gain control of the House—and quite possibly the Senate.
That's the nightmare scenario. It would spell an end to any hope of progress in the next two years—and quite possibly to Obama's presidency.
But there are three key races that Republicans would have to win to take the Senate, and all are tied. Meaning, they're close enough for us to tip the balance. We need to help these Democratic candidates raise enough money to get their message out—despite all the corporate ads targeting them—and run serious get-out-the-vote efforts.
This is a true emergency: We must stop the Republicans from taking over the Senate. There's a critical fundraising deadline at midnight tonight.
Please, make the most generous contribution you can afford, immediately
Here are the three progressive candidates in tight races who need our help right now:
We're adding Alexi Giannoulias in Illinois to our Progressive Heroes list today because he's locked in a tight race for President Obama's old Senate seat, and because he's running a populist campaign focused on taking on the corporate special interests and cleaning up Washington, D.C. This is the closest race in the country: Every poll in this race for the past two months has been tied.
Sen. Patty Murray is the highest-ranking Democratic woman in the Senate. She supported the public option and the fight for clean energy jobs, and has worked with other pro-choice Democratic women senators to eliminate egregious gender disparities in insurance coverage. Her Republican challenger significantly out-raised her in the last three months, and Murray needs our help to win.
And Sen. Harry Reid in Nevada is facing Sharron Angle, the tea party fanatic who wants to "phase out" Social Security and Medicare, withdraw from the United Nations, and abolish the Department of Education.1 The latest polls show her tied—or even slightly ahead, and just yesterday her campaign announced that they've raised a record-breaking $14 million in the past three months.2
Can you chip in to these candidates' campaigns and help stop the takeover?
Thanks for all you do.
–Michael, Joan, Anna, Adam, and the rest of the team
1. "Sharron Angle says eliminate Social Security," Progress Now Nevada, June 8, 2010
"Reid, in Fistfight, Could Take More Punches From Climate Bill," Climate Wire, May 26, 2010
"Sharron Angle wants to eliminate federal Department of Education," MyNews4, September 8, 2010
2. "Angle raises $14.3 million," The Washington Post, October 12, 2010
--------------------------------------------------------------------------
PAID FOR BY MOVEON.ORG POLITICAL ACTION, http://pol.moveon.org/.
That's the nightmare scenario. It would spell an end to any hope of progress in the next two years—and quite possibly to Obama's presidency.
But there are three key races that Republicans would have to win to take the Senate, and all are tied. Meaning, they're close enough for us to tip the balance. We need to help these Democratic candidates raise enough money to get their message out—despite all the corporate ads targeting them—and run serious get-out-the-vote efforts.
This is a true emergency: We must stop the Republicans from taking over the Senate. There's a critical fundraising deadline at midnight tonight.
Please, make the most generous contribution you can afford, immediately
Here are the three progressive candidates in tight races who need our help right now:
We're adding Alexi Giannoulias in Illinois to our Progressive Heroes list today because he's locked in a tight race for President Obama's old Senate seat, and because he's running a populist campaign focused on taking on the corporate special interests and cleaning up Washington, D.C. This is the closest race in the country: Every poll in this race for the past two months has been tied.
Sen. Patty Murray is the highest-ranking Democratic woman in the Senate. She supported the public option and the fight for clean energy jobs, and has worked with other pro-choice Democratic women senators to eliminate egregious gender disparities in insurance coverage. Her Republican challenger significantly out-raised her in the last three months, and Murray needs our help to win.
And Sen. Harry Reid in Nevada is facing Sharron Angle, the tea party fanatic who wants to "phase out" Social Security and Medicare, withdraw from the United Nations, and abolish the Department of Education.1 The latest polls show her tied—or even slightly ahead, and just yesterday her campaign announced that they've raised a record-breaking $14 million in the past three months.2
Can you chip in to these candidates' campaigns and help stop the takeover?
Thanks for all you do.
–Michael, Joan, Anna, Adam, and the rest of the team
1. "Sharron Angle says eliminate Social Security," Progress Now Nevada, June 8, 2010
"Reid, in Fistfight, Could Take More Punches From Climate Bill," Climate Wire, May 26, 2010
"Sharron Angle wants to eliminate federal Department of Education," MyNews4, September 8, 2010
2. "Angle raises $14.3 million," The Washington Post, October 12, 2010
--------------------------------------------------------------------------
PAID FOR BY MOVEON.ORG POLITICAL ACTION, http://pol.moveon.org/.
Tuesday, September 28, 2010
The U.S. Solar Market Annual Review: 2010 Early Results
RenewableEnergyWorld.com weekly e-newsletter
FREE to you every week. To view an online version of this message, please visit http://www.renewableenergyworld.com/partner/altaterra/2010-09-21/.
Our Online Executive Conferences bring you independent, in-depth information on critical marketplace developments in efficiency, renewable energy, and sustainable business--in a time-efficient 60- to 90-minute interactive format.
Final Call: The U.S. Solar Market Annual Review: 2010 Early Results
When: Thursday, September 30, 2010
11:00 AM-12:30 PM PT / 2:00-3:30 PM ET
Where: Live Online Web Conference and Teleconference
Cost: $74 to $331 (See registration page for details)
Contact: Eric Paul (e.paul@altaterra.net)
Registration Ends this Wednesday, September 30
Register for this event »
Online Conference Details Full Details »
Larry Sherwood, the solar industry’s "best-kept secret," is the author of the single most widely cited source of information about the United States’ solar market--the annual IREC U.S. Solar Market Trends report.
In this online conference, we will be taking a behind-the-scenes preview of 2010 and look into 2011. Mr. Sherwood will provide data and analysis including preliminary installation results and projections by state, customer segment, and technology for the U.S. solar market.
If you do or are considering doing business in the U.S., you can’t afford to miss this opportunity to learn how the U.S. solar market is shaping up this year and what to expect next year.
This presentation and discussion will address key questions facing solar companies today, including:
• How have sales and installations grown in 2010 and what is the outlook for 2011?
• How does the total market break down by state and by segment (residential, commercial, utility)?
• How is project size growing?
• How have the concentrating solar power (CSP/CST) and solar heating and cooling markets developed in 2010 and what can be expected for 2011?
• What are the implementation and market execution bottlenecks, and how are they being addressed?
• Which states had the most installations in 2010? Which states experienced the highest growth rates?
• What are the key factors driving the market for the near future?
The conference will provide an in-depth look at the rapidly-changing nature of the U.S. solar market, including preliminary installation figures for 2010 by state, customer segment, and technology. The conference will also feature a discussion on potential regulatory barriers to accelerated growth and the latest incentives driving state-level growth.
RenewableEnergyWorld.com Editor Jennifer Runyon will draw on her wide knowledge of the solar market industry and trends to frame and contribute to the discussion. The event will be moderated by Jon Guice, managing director of research at AltaTerra.
About the Speaker: Larry Sherwood is widely known as the author of the authoritative annual report, "U.S. Solar Market Trends 2009," with the Interstate Renewable Energy Council. President of Sherwood Associates, a renewable energy consulting firm, Mr. Sherwood has nearly 30 years of experience in renewable energy. His public roles include serving as Project Administrator for the Solar America Board for Codes and Standards, Executive Director of the Small Wind Certification Council, and Editor of the IREC Small Wind Newsletter.
Read Full Details »
Register for this event »
--------------------------------------------------------------------------------
About Online Executive Conferences
Our Online Executive Conferences are designed to provide independent professional education on critical market developments in efficiency, renewable energy, and sustainable business. Recognized experts from the business community, institutions, and government share information and insights in an accessible conference session format that is interactive and non-sponsored. Conferences typically begin with an overview, then move into greater detail and close with a moderated audience question-and-answer (Q&A) period. You may access an online recording, including audio and presentations, shortly after the conference.
These events are co-produced by AltaTerra Research and RenewableEnergyWorld.com.
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FREE to you every week. To view an online version of this message, please visit http://www.renewableenergyworld.com/partner/altaterra/2010-09-21/.
Our Online Executive Conferences bring you independent, in-depth information on critical marketplace developments in efficiency, renewable energy, and sustainable business--in a time-efficient 60- to 90-minute interactive format.
Final Call: The U.S. Solar Market Annual Review: 2010 Early Results
When: Thursday, September 30, 2010
11:00 AM-12:30 PM PT / 2:00-3:30 PM ET
Where: Live Online Web Conference and Teleconference
Cost: $74 to $331 (See registration page for details)
Contact: Eric Paul (e.paul@altaterra.net)
Registration Ends this Wednesday, September 30
Register for this event »
Online Conference Details Full Details »
Larry Sherwood, the solar industry’s "best-kept secret," is the author of the single most widely cited source of information about the United States’ solar market--the annual IREC U.S. Solar Market Trends report.
In this online conference, we will be taking a behind-the-scenes preview of 2010 and look into 2011. Mr. Sherwood will provide data and analysis including preliminary installation results and projections by state, customer segment, and technology for the U.S. solar market.
If you do or are considering doing business in the U.S., you can’t afford to miss this opportunity to learn how the U.S. solar market is shaping up this year and what to expect next year.
This presentation and discussion will address key questions facing solar companies today, including:
• How have sales and installations grown in 2010 and what is the outlook for 2011?
• How does the total market break down by state and by segment (residential, commercial, utility)?
• How is project size growing?
• How have the concentrating solar power (CSP/CST) and solar heating and cooling markets developed in 2010 and what can be expected for 2011?
• What are the implementation and market execution bottlenecks, and how are they being addressed?
• Which states had the most installations in 2010? Which states experienced the highest growth rates?
• What are the key factors driving the market for the near future?
The conference will provide an in-depth look at the rapidly-changing nature of the U.S. solar market, including preliminary installation figures for 2010 by state, customer segment, and technology. The conference will also feature a discussion on potential regulatory barriers to accelerated growth and the latest incentives driving state-level growth.
RenewableEnergyWorld.com Editor Jennifer Runyon will draw on her wide knowledge of the solar market industry and trends to frame and contribute to the discussion. The event will be moderated by Jon Guice, managing director of research at AltaTerra.
About the Speaker: Larry Sherwood is widely known as the author of the authoritative annual report, "U.S. Solar Market Trends 2009," with the Interstate Renewable Energy Council. President of Sherwood Associates, a renewable energy consulting firm, Mr. Sherwood has nearly 30 years of experience in renewable energy. His public roles include serving as Project Administrator for the Solar America Board for Codes and Standards, Executive Director of the Small Wind Certification Council, and Editor of the IREC Small Wind Newsletter.
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Friday, September 3, 2010
A.O.P: The Secret Investment That's Crushing Gold!
A.O.P: The Secret Investment That's Crushing Gold!
Learn about this special type of investment out there that’s not only beaten gold over the past decade but has practically destroyed every asset class on the market as well. Don’t miss your chance to get in on the biggest payouts yet.
Copied from http://www.stockgumshoe.com/2010/08/a-o-p-the-secret-investment-thats-crushing-gold.html
“Everyone knows gold is a great investment. Since 2000, it’s gone from $275 to $1,250 an ounce.
“But what if I told you there’s a special type of investment out there that’s not only beaten gold over the past decade but has practically destroyed every asset class on the market as well. In terms of average, annualized returns:
“It’s performed 18-times better than the S&P 500
“It’s beaten mutual funds 17 to 1
“It’s beaten utilities 6 to 1
“It’s beaten bonds 3 to 1
“In fact, we couldn’t find a single type of investment that has even come close to this ‘gold-beater.’
“And the next 12-24 months could be the most profitable period to date for this investment.”
Not that gold is necessarily the one thing we should be comparing all other investments to (personally, I’ve always thought of gold as more of a “store of value” savings vehicle than an investment, but it sure has gone up in recent years) … but whatever you compare it to, those are some nice numbers.
So what is this? The folks at Stansberry Research tell us that they call it the “A.O.P.” — here’s how they put it:
“Spawned by a 31-year old snippet of U.S. corporate tax code, the A.O.P. has been generating capital gains AND progressively higher levels of income since the inception.
“But you won’t find this income opportunity through any government agency website… even though it owes its very existence to an act of Congress.
“Plus – and here’s the kicker – the A.O.P. has historically increased shareholder payouts every year no matter what’s going on in the markets.”
And then, as newsletters are wont to do, they brag about the fact that they’ve been behind this “AOP” investment for a long time, letting their shareholders enjoy a nice run:
“We first wrote about the A.O.P. four years ago.
“At the time the economy was booming, the financial markets were still strong, and people were spending money hand over fist.
“Everyone knows what happened next…
“Banks began to fail, the markets collapsed, the economy went into a tailspin…
“But for those who took advantage of the A.O.P., it’s been a much different story…”
So this made me check back in the Gumshoe files … and yes, the S&A Resource Report did teaser this “AOP” investment in their ad campaigns several years ago — I don’t know if it was really four years ago, since I wasn’t publishing then and the Gumshoe had yet to lay the foundation on our virtual edutainment storefront … but I did write about Matt Badiali’s teaser for his newsletter, which was then called the S&A Oil Report, and he was pushing the “AOP” quite hard then.
And from that point, the investments have mostly done quite well — but that’s because they’re roughly flat (not counting dividends) — which, compared to the S&P and other comparables, is pretty good. When I wrote about this sector for the first time back then, in May of 2007 when my inbox was overflowing with A.O.P. stuff, I thought these investments were pretty expensive and would have to come back in to make the yields more competitive and attractive… and they did, taking an outsize hit in late 2008 and early 2009 that made them, in retrospect, insanely cheap.
But I should go ahead and slake your thirst for the “answer”, right? The A.O.P. is their acronym for “American Oil Pension,” and then as now it’s a teaser about investing in Master Limited Partnerships (MLPs), largely those MLPs that make up the majority of the sector, the companies that transport, process and store oil and natural gas.
I’d have to assume, however, that Badiali and his copywriters are teasing out different MLPs than they did three years ago — so let’s dig into the tease a bit, shall we?
If you’re not familiar with the MLP term (and don’t worry, no one else sues AOP — that’s just a copywriter invention to help make this seem mysterious, and bolster Badiali’s case that he’s got the inside info you need on this little-known investment), Master Limited Partnerships are a creation of the Reagan-era tax code, designed to help spur investment in our oil and gas infrastructure and domestic energy production.
There were some bad apples in the bunch in the early years that were essentially just created as tax dodges, but the sector is now largely well-run and well-respected, and the larger MLPs are effective and efficient pipeline operators (for the most part) who benefit from the tax code in a couple ways: first, they don’t have to pay taxes on their corporate income as long as they pass it along to their unitholders (not technically shareholders, since these are partnerships, not corporations); and second, they own assets that for the most part are very long-lived and relatively inexpensive to maintain, and that generally depreciate quite a bit faster than they physically deteriorate, so they generate even more cash than they actually classify as income, meaning that they can disperse even more cash to their unitholders and keep them happy.
I’ve written about MLPs many times before, so this may all be a bit boring — but essentially, they are a way to get high current income and defer taxes on that income until you sell your units, since the fact that the dividends/distributions to unitholders are far higher than the partnership’s reported income means that you’re often getting a “return of capital” as most of your distribution, which just lowers your cost basis in the shares and means you end up paying capital gains taxes on that “return of capital” … but not until you sell the shares and register that gain, so you get to choose when to incur taxes (and I’m not a tax expert so don’t rely on me for the details of this, but I think that inherited MLP shares get a bump up in cost basis, so this is a popular investment among older investors in part as a way to efficiently pass along wealth to future generations without forgoing current income — do remember, I could easily be wrong on that point).
And yes, MLPs are generally probably not very well understood by most investors, so there is perhaps an opportunity for folks to get in on a sector that’s critical and profitable but somewhat small and not dominated by institutions (many institutions can’t own MLPs, and most mutual funds do not although they’re now technically allowed to), but it’s worth noting that MLPs generally trade like other yield-focused investments — they compete with bonds, high dividend stocks, and stuff like Real Estate Investment Trusts for the attention of income-focused investors, so the prices fluctuate in part due to yield expectations for those other sectors. Right now the yields on most investments are so absurdly low that it’s tough to say what’s fair — the REITs and the utilities yield about 4-4.5% (or at least the averages of those, as measured by the big ETFs for those sectors), the ten year US Treasury bond or a 5-year CD yields a bit under 3%, and the closest thing to an index for MLPs (the JP Morgan Alerian Exchange Traded Note) yields about 5.5%. MLPs don’t historically seem to get to yield much less than that before the price falls to get the income levels back up, but we haven’t had many long-lasting low-interest-rate environments like this in the past, where 5 or 6% seems like a terrific yield.
And certainly MLPs have been probably by far the best thing to own for the last decade or so — the compounding high interest and the relative stability of their income stream have helped them to avoid the worst of the crashes (though they’ve had several downward spikes), and I wouldn’t argue with anyone who wanted to dedicate a portion of their portfolio to the sector.
So without further ado, which are the favored “A.O.P.” investments that Matt Badiali is pushing now? Here’s how he hints for us:
“Today, there are TWO A.O.P. businesses that stand head and shoulders above the rest—they regularly send out the biggest paychecks… and have superior streams of revenue.
“I’m very confident and pleased with the results these companies have had to offer investors. Take a look below, and you’ll find a brief description of what I really like about each one:
“A.O.P. Company #1: This Pennsylvania business owns and operates natural gas assets, including five natural gas processing facilities and over 4,000 miles of natural gas gathering pipelines.
“Although they’ve only been around for 3 years, this company has increased its distribution payouts by an incredible 457%.
“Since 2005, they’ve also increased their total revenues by 58% and cash distributions by around 200%.
“To qualify for the August 14, 2010 distribution check, you must enroll by August 3.”
Well, I don’t know how you get the “only been around for three years” and reconcile that with the “since 2005″ numbers in the subsequent paragraph, but maybe they just made a little mistake on the dates — this MLP had only been around for three years in 2005, arguably (this entity was formed in 2001), but they have been in business under various names and corporate structures since the late 19th century … I think this first one must be Penn Virginia Resources (PVR), which does have the natural gas assets described in the tease but which is also has a second major business as an owner of coal properties in Appalachia.
And oddly enough, when you think “Pennsylvania” and natural gas you probably think of the Marcellus Shale, which might get you excited about growth prospects for Penn Virginia … but in actuality, when it comes to natural gas they’re still mostly a Texas/Oklahoma company. That’s possibly going to gradually change over the next several years, since they have made deals with two different Marcellus producers to expand gathering systems in the area over the next several years, most notably a five-year deal with Range Resources that started just recently and that will have them spending a couple hundred million building out gathering pipes for some of Range’s acreage in Pennsylvania. They do think this will be accretive to “distributable cash flow” by next year, which means they shouldn’t have to cut the quarterly distribution to unitholders.
PVR is an interesting MLP, they own primarily gathering and midstream assets on the natural gas side (gathering is what it sounds like, small pipes that connect the wells to bigger pipelines for movement to refineries or storage; midstream is mostly refining and processing, and the separating of natural gas liquids), which means they have to constantly analyze the production in their service areas and expand to new areas as (or if) the area where they’re “gathering” sees production declines, so it’s a bit more complicated than the MLPs who primarily own the big interstate pipelines that primarily, for example, move crude oil from the Gulf Coast to the Northeast.
And if you add on the coal business, you’d think that would provide some additional stability to earnings — you get, at least, more diversity of revenue. The coal business is basically just land ownership — the own the coal, but they don’t produce it, they just collect royalties, so it’s far smaller in terms of revenue than their natural gas business, but that revenue comes in with far higher margins because they don’t actually have to mine the coal.
But even given that, this MLP has an above-average yield, and unlike some MLPs they actually make enough in income to cover their distribution (it’s not just the distribution of depreciation). I haven’t looked at this one for my personal account in a long time, and I don’t want to downplay the relative risk of owning gathering systems in Texas and Oklahoma when fields might decline, but it is impressive that they have an above-average yield for the MLP space (just under 8%) — and like essentially all MLPs, they have been able to continue to increase the distribution amount, though not as aggressively as some. They’ve got a market cap of about a billion dollars, so they’re quite small compared to big guys like Kinder Morgan (KMP) and Enterprise Products Partners (EPD) which are 20 times as large, but they also yield more (the big MLPs generally have yields in the low-6% range) and, since they are smaller, might arguably have more growth potential.
And there’s one more …
“AOP Company #2: This Houston firm is one of the largest A.O.P. businesses in the world. They own 49,100 of oil and gas pipeline throughout the continental U.S.
“If you bought 5,000 shares of this A.O.P. business soon after it first went public in 1998, you would have since collected over $90,000 in distribution payouts.
“You’d have received 47 distribution checks during that time and your initial $5,000 stake would now be worth $155,000 in capital gains. Combined, you’d have made $245,000.
“In order to ensure you receive the next distribution payout, which will likely be paid on August 13, you will want to purchase your shares prior to August 6, 2010.”
Well, what do you know — this one is one of the biggies I mentioned above, Enterprise Products Partners (EPD). I think this is actually the largest of the pipeline MLPs at the moment, their market cap is just under $25 billion, and they do pretty much everything that you think of for “traditional” MLPs — they own gas gathering systems, they own onshore and offshore pipelines for both gas and oil, they do midstream gas processing and marketing of the various products, they own storage facilities and terminals, and they even sell chemicals and feedstocks. So if you’re looking for one of the more diversified MLPs, it’s hard to argue with EPD.
While Enterprise is huge, they are also focused on growing — and growth for MLPs generally means either acquiring small pipeline operators, or building new (or expanding and extending old) gathering and transportation systems. EPD has done quite a bit of acquiring in the past, and they do seem focused on significant oil and gas growth areas, which I would always look for in an MLP to make sure they’ve got some potential to keep adding to their revenue base — in EPD’s case, the expansion focus seems largely to be the southern shale areas, primarily Barnett and Haynesville, and the big Eagle Ford Shale that has everyone excited in South Texas.
But as I said, the yield is not massive — EPD will earn you just a whisper over 6%, and that will eventually be taxable unless you try to finagle holding it in an IRA. And most people don’t recommend holding MLPs in IRAs since a lot of their value is in the tax deferral, which you get with an IRA anyway — as an aside, some MLPs will tell you that holding their units in a Roth IRA isn’t kosher, but I think that’s just for pipeline operators that are entirely FERC-regulated (I know that both Boardwalk Pipeline — which I own — and El Paso Pipeline Partners are ineligible for Roth IRAs, but as far as I know that’s a FERC-specific issue in proving that tax is eventually paid on those distributions).
So there you have it — the two main A.O.P. investments that Badiali appears to be recommending in the MLP space this time around — and no, neither of these was on his list three or four years ago, if you’re curious about those “original” A.O.P. ideas you can always check out my older article here (those four picks from 2006 or 2007 have generally done well, though as a group they’ve probably been similar to the average MLP performance — unless you picked these on downward spikes they’re wealth builders and powerful compounders, not usually rocket stocks), and of course under “related articles” below you’ll see several other MLP-oriented articles, these tend to come up at least once a month or so.
The only general thoughts I’d share as you get started in your research are to look at how the MLPs you like might grow (ie, these days that mostly means they’re either an acquirer, or they’re serving the hot new exploration areas in some way, like shale gas), and make sure they’re generating enough free cash (or EBITDA, depending how you want to measure — it doesn’t have to be actual accounting income) so they don’t have to cut the distribution if things get ugly for a year (as happened in late 2008, precipitating the dips in most of these stocks — and the disappearance of the weakest ones). You might also, if you’re looking more closely, check on how the company’s pipes are regulated and their services priced — many pipelines, especially larger ones, tend to have pricing agreements set by regulators, like other utilities, and they tend to be consistently busy, the smaller or more regional gathering systems may be unregulated and possibly more subject to pricing pressures from time to time.
And, of course, there’s always risk — just ask Enbridge Energy Partners (EEP) about their major spill last week on the pipeline that transports Canadian oil to midwest refineries (though that’s of course quite minor compared to BP’s Gulf disaster, and didn’t seem to hit EEP’s unit price terribly hard, at least not yet).
Finally, I know I have lots of MLP-happy folks in the vast Stock Gumshoe readership, so feel free to share your thoughts about the best or worst MLPs out there, that’s why we’ve got the friendly little comment box below.
Full disclosure: as noted above, I do own shares of Boardwalk Pipeline Partners (BWP), but do not currently own any other Master Limited Partnership units named above (or any others, actually). I will not trade in any mentioned shares for at least three days.
Learn about this special type of investment out there that’s not only beaten gold over the past decade but has practically destroyed every asset class on the market as well. Don’t miss your chance to get in on the biggest payouts yet.
Copied from http://www.stockgumshoe.com/2010/08/a-o-p-the-secret-investment-thats-crushing-gold.html
“Everyone knows gold is a great investment. Since 2000, it’s gone from $275 to $1,250 an ounce.
“But what if I told you there’s a special type of investment out there that’s not only beaten gold over the past decade but has practically destroyed every asset class on the market as well. In terms of average, annualized returns:
“It’s performed 18-times better than the S&P 500
“It’s beaten mutual funds 17 to 1
“It’s beaten utilities 6 to 1
“It’s beaten bonds 3 to 1
“In fact, we couldn’t find a single type of investment that has even come close to this ‘gold-beater.’
“And the next 12-24 months could be the most profitable period to date for this investment.”
Not that gold is necessarily the one thing we should be comparing all other investments to (personally, I’ve always thought of gold as more of a “store of value” savings vehicle than an investment, but it sure has gone up in recent years) … but whatever you compare it to, those are some nice numbers.
So what is this? The folks at Stansberry Research tell us that they call it the “A.O.P.” — here’s how they put it:
“Spawned by a 31-year old snippet of U.S. corporate tax code, the A.O.P. has been generating capital gains AND progressively higher levels of income since the inception.
“But you won’t find this income opportunity through any government agency website… even though it owes its very existence to an act of Congress.
“Plus – and here’s the kicker – the A.O.P. has historically increased shareholder payouts every year no matter what’s going on in the markets.”
And then, as newsletters are wont to do, they brag about the fact that they’ve been behind this “AOP” investment for a long time, letting their shareholders enjoy a nice run:
“We first wrote about the A.O.P. four years ago.
“At the time the economy was booming, the financial markets were still strong, and people were spending money hand over fist.
“Everyone knows what happened next…
“Banks began to fail, the markets collapsed, the economy went into a tailspin…
“But for those who took advantage of the A.O.P., it’s been a much different story…”
So this made me check back in the Gumshoe files … and yes, the S&A Resource Report did teaser this “AOP” investment in their ad campaigns several years ago — I don’t know if it was really four years ago, since I wasn’t publishing then and the Gumshoe had yet to lay the foundation on our virtual edutainment storefront … but I did write about Matt Badiali’s teaser for his newsletter, which was then called the S&A Oil Report, and he was pushing the “AOP” quite hard then.
And from that point, the investments have mostly done quite well — but that’s because they’re roughly flat (not counting dividends) — which, compared to the S&P and other comparables, is pretty good. When I wrote about this sector for the first time back then, in May of 2007 when my inbox was overflowing with A.O.P. stuff, I thought these investments were pretty expensive and would have to come back in to make the yields more competitive and attractive… and they did, taking an outsize hit in late 2008 and early 2009 that made them, in retrospect, insanely cheap.
But I should go ahead and slake your thirst for the “answer”, right? The A.O.P. is their acronym for “American Oil Pension,” and then as now it’s a teaser about investing in Master Limited Partnerships (MLPs), largely those MLPs that make up the majority of the sector, the companies that transport, process and store oil and natural gas.
I’d have to assume, however, that Badiali and his copywriters are teasing out different MLPs than they did three years ago — so let’s dig into the tease a bit, shall we?
If you’re not familiar with the MLP term (and don’t worry, no one else sues AOP — that’s just a copywriter invention to help make this seem mysterious, and bolster Badiali’s case that he’s got the inside info you need on this little-known investment), Master Limited Partnerships are a creation of the Reagan-era tax code, designed to help spur investment in our oil and gas infrastructure and domestic energy production.
There were some bad apples in the bunch in the early years that were essentially just created as tax dodges, but the sector is now largely well-run and well-respected, and the larger MLPs are effective and efficient pipeline operators (for the most part) who benefit from the tax code in a couple ways: first, they don’t have to pay taxes on their corporate income as long as they pass it along to their unitholders (not technically shareholders, since these are partnerships, not corporations); and second, they own assets that for the most part are very long-lived and relatively inexpensive to maintain, and that generally depreciate quite a bit faster than they physically deteriorate, so they generate even more cash than they actually classify as income, meaning that they can disperse even more cash to their unitholders and keep them happy.
I’ve written about MLPs many times before, so this may all be a bit boring — but essentially, they are a way to get high current income and defer taxes on that income until you sell your units, since the fact that the dividends/distributions to unitholders are far higher than the partnership’s reported income means that you’re often getting a “return of capital” as most of your distribution, which just lowers your cost basis in the shares and means you end up paying capital gains taxes on that “return of capital” … but not until you sell the shares and register that gain, so you get to choose when to incur taxes (and I’m not a tax expert so don’t rely on me for the details of this, but I think that inherited MLP shares get a bump up in cost basis, so this is a popular investment among older investors in part as a way to efficiently pass along wealth to future generations without forgoing current income — do remember, I could easily be wrong on that point).
And yes, MLPs are generally probably not very well understood by most investors, so there is perhaps an opportunity for folks to get in on a sector that’s critical and profitable but somewhat small and not dominated by institutions (many institutions can’t own MLPs, and most mutual funds do not although they’re now technically allowed to), but it’s worth noting that MLPs generally trade like other yield-focused investments — they compete with bonds, high dividend stocks, and stuff like Real Estate Investment Trusts for the attention of income-focused investors, so the prices fluctuate in part due to yield expectations for those other sectors. Right now the yields on most investments are so absurdly low that it’s tough to say what’s fair — the REITs and the utilities yield about 4-4.5% (or at least the averages of those, as measured by the big ETFs for those sectors), the ten year US Treasury bond or a 5-year CD yields a bit under 3%, and the closest thing to an index for MLPs (the JP Morgan Alerian Exchange Traded Note) yields about 5.5%. MLPs don’t historically seem to get to yield much less than that before the price falls to get the income levels back up, but we haven’t had many long-lasting low-interest-rate environments like this in the past, where 5 or 6% seems like a terrific yield.
And certainly MLPs have been probably by far the best thing to own for the last decade or so — the compounding high interest and the relative stability of their income stream have helped them to avoid the worst of the crashes (though they’ve had several downward spikes), and I wouldn’t argue with anyone who wanted to dedicate a portion of their portfolio to the sector.
So without further ado, which are the favored “A.O.P.” investments that Matt Badiali is pushing now? Here’s how he hints for us:
“Today, there are TWO A.O.P. businesses that stand head and shoulders above the rest—they regularly send out the biggest paychecks… and have superior streams of revenue.
“I’m very confident and pleased with the results these companies have had to offer investors. Take a look below, and you’ll find a brief description of what I really like about each one:
“A.O.P. Company #1: This Pennsylvania business owns and operates natural gas assets, including five natural gas processing facilities and over 4,000 miles of natural gas gathering pipelines.
“Although they’ve only been around for 3 years, this company has increased its distribution payouts by an incredible 457%.
“Since 2005, they’ve also increased their total revenues by 58% and cash distributions by around 200%.
“To qualify for the August 14, 2010 distribution check, you must enroll by August 3.”
Well, I don’t know how you get the “only been around for three years” and reconcile that with the “since 2005″ numbers in the subsequent paragraph, but maybe they just made a little mistake on the dates — this MLP had only been around for three years in 2005, arguably (this entity was formed in 2001), but they have been in business under various names and corporate structures since the late 19th century … I think this first one must be Penn Virginia Resources (PVR), which does have the natural gas assets described in the tease but which is also has a second major business as an owner of coal properties in Appalachia.
And oddly enough, when you think “Pennsylvania” and natural gas you probably think of the Marcellus Shale, which might get you excited about growth prospects for Penn Virginia … but in actuality, when it comes to natural gas they’re still mostly a Texas/Oklahoma company. That’s possibly going to gradually change over the next several years, since they have made deals with two different Marcellus producers to expand gathering systems in the area over the next several years, most notably a five-year deal with Range Resources that started just recently and that will have them spending a couple hundred million building out gathering pipes for some of Range’s acreage in Pennsylvania. They do think this will be accretive to “distributable cash flow” by next year, which means they shouldn’t have to cut the quarterly distribution to unitholders.
PVR is an interesting MLP, they own primarily gathering and midstream assets on the natural gas side (gathering is what it sounds like, small pipes that connect the wells to bigger pipelines for movement to refineries or storage; midstream is mostly refining and processing, and the separating of natural gas liquids), which means they have to constantly analyze the production in their service areas and expand to new areas as (or if) the area where they’re “gathering” sees production declines, so it’s a bit more complicated than the MLPs who primarily own the big interstate pipelines that primarily, for example, move crude oil from the Gulf Coast to the Northeast.
And if you add on the coal business, you’d think that would provide some additional stability to earnings — you get, at least, more diversity of revenue. The coal business is basically just land ownership — the own the coal, but they don’t produce it, they just collect royalties, so it’s far smaller in terms of revenue than their natural gas business, but that revenue comes in with far higher margins because they don’t actually have to mine the coal.
But even given that, this MLP has an above-average yield, and unlike some MLPs they actually make enough in income to cover their distribution (it’s not just the distribution of depreciation). I haven’t looked at this one for my personal account in a long time, and I don’t want to downplay the relative risk of owning gathering systems in Texas and Oklahoma when fields might decline, but it is impressive that they have an above-average yield for the MLP space (just under 8%) — and like essentially all MLPs, they have been able to continue to increase the distribution amount, though not as aggressively as some. They’ve got a market cap of about a billion dollars, so they’re quite small compared to big guys like Kinder Morgan (KMP) and Enterprise Products Partners (EPD) which are 20 times as large, but they also yield more (the big MLPs generally have yields in the low-6% range) and, since they are smaller, might arguably have more growth potential.
And there’s one more …
“AOP Company #2: This Houston firm is one of the largest A.O.P. businesses in the world. They own 49,100 of oil and gas pipeline throughout the continental U.S.
“If you bought 5,000 shares of this A.O.P. business soon after it first went public in 1998, you would have since collected over $90,000 in distribution payouts.
“You’d have received 47 distribution checks during that time and your initial $5,000 stake would now be worth $155,000 in capital gains. Combined, you’d have made $245,000.
“In order to ensure you receive the next distribution payout, which will likely be paid on August 13, you will want to purchase your shares prior to August 6, 2010.”
Well, what do you know — this one is one of the biggies I mentioned above, Enterprise Products Partners (EPD). I think this is actually the largest of the pipeline MLPs at the moment, their market cap is just under $25 billion, and they do pretty much everything that you think of for “traditional” MLPs — they own gas gathering systems, they own onshore and offshore pipelines for both gas and oil, they do midstream gas processing and marketing of the various products, they own storage facilities and terminals, and they even sell chemicals and feedstocks. So if you’re looking for one of the more diversified MLPs, it’s hard to argue with EPD.
While Enterprise is huge, they are also focused on growing — and growth for MLPs generally means either acquiring small pipeline operators, or building new (or expanding and extending old) gathering and transportation systems. EPD has done quite a bit of acquiring in the past, and they do seem focused on significant oil and gas growth areas, which I would always look for in an MLP to make sure they’ve got some potential to keep adding to their revenue base — in EPD’s case, the expansion focus seems largely to be the southern shale areas, primarily Barnett and Haynesville, and the big Eagle Ford Shale that has everyone excited in South Texas.
But as I said, the yield is not massive — EPD will earn you just a whisper over 6%, and that will eventually be taxable unless you try to finagle holding it in an IRA. And most people don’t recommend holding MLPs in IRAs since a lot of their value is in the tax deferral, which you get with an IRA anyway — as an aside, some MLPs will tell you that holding their units in a Roth IRA isn’t kosher, but I think that’s just for pipeline operators that are entirely FERC-regulated (I know that both Boardwalk Pipeline — which I own — and El Paso Pipeline Partners are ineligible for Roth IRAs, but as far as I know that’s a FERC-specific issue in proving that tax is eventually paid on those distributions).
So there you have it — the two main A.O.P. investments that Badiali appears to be recommending in the MLP space this time around — and no, neither of these was on his list three or four years ago, if you’re curious about those “original” A.O.P. ideas you can always check out my older article here (those four picks from 2006 or 2007 have generally done well, though as a group they’ve probably been similar to the average MLP performance — unless you picked these on downward spikes they’re wealth builders and powerful compounders, not usually rocket stocks), and of course under “related articles” below you’ll see several other MLP-oriented articles, these tend to come up at least once a month or so.
The only general thoughts I’d share as you get started in your research are to look at how the MLPs you like might grow (ie, these days that mostly means they’re either an acquirer, or they’re serving the hot new exploration areas in some way, like shale gas), and make sure they’re generating enough free cash (or EBITDA, depending how you want to measure — it doesn’t have to be actual accounting income) so they don’t have to cut the distribution if things get ugly for a year (as happened in late 2008, precipitating the dips in most of these stocks — and the disappearance of the weakest ones). You might also, if you’re looking more closely, check on how the company’s pipes are regulated and their services priced — many pipelines, especially larger ones, tend to have pricing agreements set by regulators, like other utilities, and they tend to be consistently busy, the smaller or more regional gathering systems may be unregulated and possibly more subject to pricing pressures from time to time.
And, of course, there’s always risk — just ask Enbridge Energy Partners (EEP) about their major spill last week on the pipeline that transports Canadian oil to midwest refineries (though that’s of course quite minor compared to BP’s Gulf disaster, and didn’t seem to hit EEP’s unit price terribly hard, at least not yet).
Finally, I know I have lots of MLP-happy folks in the vast Stock Gumshoe readership, so feel free to share your thoughts about the best or worst MLPs out there, that’s why we’ve got the friendly little comment box below.
Full disclosure: as noted above, I do own shares of Boardwalk Pipeline Partners (BWP), but do not currently own any other Master Limited Partnership units named above (or any others, actually). I will not trade in any mentioned shares for at least three days.
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