I’m going to move to reduce the exposure of my Dividend Income Portfolio (https://jubakpicks.com/jubak-dividend-income-portfolio/ ) to the natural resources sector by selling coal-mining master limited partnership Natural Resource Partners (NRP) out of the portfolio. My choice was between selling this master limited partnership or Penn Virginia Resources (PVR) and I decided to stick with Penn Virginia because the company’s gas distribution, coal-bed methane, and timber assets give it a more diversified blend of natural resources businesses than Natural Resource Partners.
So why sell Natural Resource Partners?
 Part of this sell decision is a timing call: It looks like the natural resource sector of the stock market could be due to rotate out of favor. (For more on that se my post https://jubakpicks.com/2009/12/04/good-news-on-jobs-hurts-treasuries-oil-stocks-crushes-gold/ ) Part of the decision is company specific, though. The company has seen debt rise in the third quarter. That, plus coal volumes that, in the third quarter were down 28% from the third quarter of 2008, will make it hard for the company to increase distributions by more than a few cents a unit in 2010. I’m selling these units out of my Dividend Income Portfolio with a 60% drop in price since I purchased them on September 6, 2005 but with a total loss, including $1,553 in dividends, of 44%. The company paid its third quarter dividend on November 13. (Full disclosure: I will sell my units of Natural Resource Partners three days after this column is posted.)
I will agree with liberty that coal will play a big role in energy of the future, but because it is expensive energy to tap into in a clean way and beacuse of high CO2 emissions, it will be out of favor for a few years I believe. I didn’t buy this because I thought it was too early, though insightful, when Jim added it. His JP portfolio is for 12-18 month returns, and I think wisely, he’s dropping for now.
The Copenhagen Climate Conference and Oblahblah’s probable capitulation of American interests have any subconcious subtext here?
What a deboggle of a suggestion. NRP currently has a major stake in the most productive coal operations in the country and is in the building process of reproducing that recipe in different parts of the United States largest coal reserves. In light of recent revelations of honesty, do we really think it won’t get cold again? Than why was this the warmest november not since 2008 but 1930? and if your interest is fuel and natural gas, answer me this: how much heat can you produce from a barrel of oil compared to a ton of coal? How about gasoline or gas product? Do the math and then don’t sell some, but get some cause NRP is building a tremendous foundation for the future.