Jason Knapp
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How to Collect a Sustainable 12% Yield - Special Situation Investing News - 9/1/2015

Welcome to the first Special Situation Investing News of September.  It's a new month, but I have the same message that I have been shouting from the rooftops for the past several months.  REITs are cheap!  Perhaps no REIT has been punished more in the recent selloff of the sector than CorEnergy Infrastructure Trust $CORR.  In CORR we have a stock that yields almost exactly 12% after its recent dividend increase to $0.15 per quarter with more than ample coverage and very low risk of this coverage shrinking in the future.

CORR's contracts with its main customers dictate that it receives payment for use of its mission critical assets regardless of what the price of oil and natural gas do.  

A picture of CORR's Pinedale Liquids Gathering System

The company's Pinedale Liquids Gathering System is fully leased to Ultra Petroleum Corp. $UPL and despite the short-term fluctuations in the price of natural gas, UPL actually has plans to increase its rig count in the high-quality Pinedale area in 2016.  Not only would UPL likely be required to continue to pay its lease on this critical infrastructure in the event of bankruptcy (which I view as vaey unlikely), but its lifting costs in the area are only around $1/mcf, lower than even the most draconian analysts' estimates of where prices are headed.

A map of $CORR's new Grand Isle Gathering System

Similarly, CORR's other large asset, the Grand Isle Gathering System, is under contract to pay the company stable cash flow from Energy XXI Ltd. $EXXI with required minimum payments that provide ample distribution coverage.  Again Not only would EXXI likely be required to continue to pay its lease on this critical infrastructure in the event of bankruptcy, its lifting cost for wells served by Grand Isle are less than $20/barrel. 

CORR's other assets (other than its horrible Black Bison loan which I criticized from the start, but is minuscule), including its MoGas Pipeline and Portland oil terminal are actually performing better today than they have in the past.  I have been selling positions that have been slightly dinged by the recent market carnage to purchase more shares of the hugely discounted CorEnergy Infrastructure Trust lately and plan to continue to do so until Mr. Market becomes more rational.

REIT expert Brad Thomas published a new article on $CORR this morning that's worth a look:

Mr. Market Wake Up, CorEnergy Is Not An MLP

http://seekingalpha.com/article/3480446-mr-market-...

And now for the rest of the Special Situation Investing News:

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Spinoffs

IDT Corporation Announces Strategic Reorganization

http://finance.yahoo.com/news/idt-corporation-anno...

LiLAC Group: Liberty Global's New Tracker

http://clarkstreetvalue.blogspot.com/2015/08/lilac...

PayPal Shares Could Rise 40% as Digital Wallets Proliferate

http://www.barrons.com/articles/paypal-shares-coul...

Macy's: Much Cheaper But Still Same Old Financial Engineering

http://seekingalpha.com/article/3481376-macys-much...

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NOLs

NOL Newsletter: Intrawest Resorts Holdings Research Report

http://seekingalpha.com/article/3478146-nol-newsle...

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SPACs

AgroFresh: Insiders Step Up, We See At Least 50% Upside Within 6-12 Months

http://seekingalpha.com/article/3477906-agrofresh-...

ROI Acquisition Corp. II Seeks Extension to Consummate Business Combination with Ascend Holdings

http://www.prnewswire.com/news-releases/roi-acquis...

Activist Investors 

Winning the long race through activist investing (NU Kellogg interview with Jeff Ubben)

http://www.kellogg.northwestern.edu/news_articles/...

Hedge fund mogul Dan Loeb is helping a Japanese car giant navigate a failed partnership

http://www.businessinsider.com/dan-loeb-is-helping...

"Suzuki, Volkswagen quarrel comes to an end" Special sit opportunity?

http://seekingalpha.com/news/2752186-suzuki-volksw...

Activist investors absolutely crushed trades

http://www.businessinsider.com/activist-investors-...

Nokomis Tracks Telenav, Sandell Has Designs on Ethan Allen

http://www.barrons.com/articles/nokomis-tracks-tel...

Freeport McMoRan: Will Icahn Bring Sale Of Energy Assets?

http://blogs.barrons.com/emergingmarketsdaily/2015...

Carl Icahn Digs Freeport McMoRan and So Do We

http://www.barrons.com/articles/carl-icahn-digs-fr...

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Hedge Funds / Whale Watching

Einhorn’s Greenlight Falls 5.3% as August Rout Deepens Slide

http://www.bloomberg.com/news/articles/2015-08-31/...

Einhorn and Loeb's hedge funds both decline 5 pct in Aug.

http://www.reuters.com/article/2015/09/01/hedgefun...

My brother told be about JD months ago, but I don't invest in the Chinese casino market. Hedge Funds Dump Alibaba for Smaller Rival Growing Twice as Fast

http://finance.yahoo.com/news/hedge-funds-dump-ali...

Seth Klarman's presentation to Bruce Greenwald's Columbia Business School class, and my notes

http://www.hedgeroll.com/hedgeroll/seth-klarman-pr...

Hedge Fund Posts Strong Gains by Shorting China

http://www.barrons.com/articles/hedge-fund-posts-s...

Berkshire Reports $4.5 Billion Stake in Refiner Phillips 66

http://www.bloomberg.com/news/articles/2015-08-29/...

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Investment Write-Ups

Closed-End Funds Trading At A Discount To NAV

http://seekingalpha.com/article/3478326-closed-end...

Mr. Market Has Been Pushing Chicago Bridge & Iron's Shares Down Too Much. I tend to agree but sold a while ago.

http://seekingalpha.com/article/3474416-mr-market-...

1 Great REIT to Buy in a Correction

http://www.fool.com/investing/general/2015/08/28/1...

Google Shares Still Have 20% Upside

http://www.barrons.com/articles/google-shares-stil...

U.S. Blue Chips With Fat Dividends Offer Value

http://www.barrons.com/articles/u-s-blue-chips-wit...

Can 10 REIT Dogs Average 44.93% Upsides And 50.02% Net Gains By August 26, 2016?

http://seekingalpha.com/article/3475966-can-10-rei...

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Other Investing News

Fiat Chrysler CEO again pushes merger with GM

http://www.usatoday.com/story/money/cars/2015/08/3...

Fiat Chrysler's Marchionne says 'unconscionable' to give up on GM deal: paper

http://www.reuters.com/article/2015/08/31/us-fiat-...

SoftBank's Share Buying Adds $6.7 Billion to Sprint's Value

http://www.bloomberg.com/news/articles/2015-08-31/...

Noranda Announces Initial Alumina Shipment as Part of Multi-Shipment Arrangement w/Chinese Aluminum Smelter $NOR +46%

http://finance.yahoo.com/news/noranda-announces-in...

"The Stocks That Got Hit The Hardest In The Recent Correction"

http://stocktwits.tumblr.com/post/127882383660/the...

Ashford Hospitality explores its options, including possible sale of the company

http://www.marketwatch.com/story/ashford-hospitali...

Wells Fargo Said to Be Front-Runner to Buy GE Railcar Unit

http://www.bloomberg.com/news/articles/2015-08-28/...

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