Friday, December 11, 2015

Recent Sell: KMI & ESV; Recent Buy: HASI

I sold all my share of KMI and ESV on December 7, 2015 (1 day before KMI dividend cut). On December 11, 2015, I bought 29 shares of Hannon Armstrong Sustainable Infrastructure Capital (HASI) at $16.58/share.

  • What is HASI? 
    • It's a reit yieldco BDC Bank. Yep 

  • Why would you buy a reit with higher interest rates? 
    • Because HASI is more of a bank than a reit. It lends and borrows like BAC, WFC, JPM, etc. It is only a reit because it deals in renewable energy. For every .25% interest hike, HASI loses $0.01 core earnings. But they can make up for it by charging higher interest rates (libor) 
  • What does HASI do and why would you buy it?
    • HASI is a BDC/bank that lends money to corporations, individuals, and government to install clean energy at lower rates than other BDC and Banks. 

      • For example, Johnson Controls (JCI) is trying to go full renewable energy. JCI is not asking for tens or hundred of millions of dollars so they can't issue stocks or bonds. If JCI borrows money from the bank, the interest rate on the loan would be anywhere from 13-18%. If JCI borrows money from BDC it would be higher. HASI can issue the loan at a reasonable 7-8%.

    • Let's get serious here. It doesn't matter if Global warming or climate change is real. Renewable energy is the wave of the future...but most renewable energy companies are crap. There I said it. Technology has yet to reach a point where solar companies can survive without tax credits.

      • HASI deals in renewable energy but not in the manufacturing or selling. It deals in the loan distribution which is a lot safer assuming no credit default. HASI deals a majority with high quality companies (see those above) and with the federal government/state government.
  • Risk 
    • HASI is a yieldco-credit crunch
    • HASI is a reit-December 16
    • HASI is a BDC-credit crunch
    • HASI is a bank-December 16
      • what I'm saying is HASI has a lot going against it but a tailwind going for it 
    • HASI is a small cap company. There is a high risk but also a high reward
On December 15, I will make my monthly loyal3 buys. $20 of KO, PEP, UL, YUM, MCD, DPS, KHC, VFC, WMT, HSY, K, DIS, SBUX, MDLZ, and APPL for a total of $300.00. That is all my buys for the month. 

Dividend fund= $2,261.66 + FCISX distribution - BBL dividend cut (probably)

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