Hi to all Ted Warren followers,
I've just begun a position that may well be a good stock to follow.
Its Name is Vitesse - which in French means rapid or great speed , and as referred to by management it is to be used with compounding wealth or, great speed in compounding wealth. My kind of company! LOL
There are two main stockholders, both experienced oil men. Collectively they own 25% of the company.
This month they completed the merger of Lucero Energy a Canadian firm (also owned by 2 Canadian multi-millionaires who have transferred their working wells to Vitesse.
With the exception of the Canadian wells Vitesse does not operate any working wells. They simply are partial owners of other wells operated by drillers like Conoco Phillips, Hess, Devon, EOG and Continental.
They have partial ownership of the mineral royalties on properties being drilled on by the E&P's doing the drilling. Land and mineral royalties are a unique concept which can be kept separate from the ownership of the land itself. The land can be sold, while the mineral rights can be retained.
Those of substantial wealth like to buy land and resell it, while retaining the mineral rights.
These folks have no expense in the drilling of the well, but they do share in the selling of the oil that is produced.
The most recent Q report was delayed until the merger of Lucero was completed.
The Recent report and presentation can be found here:
Presentations :: Vitesse Energy, Inc. (VTS)
During Vitesse's report on 3/11, they indicated a crude price of mid 65's allows for a comfortable increase in the dividend to .5625 or annually a dividend of $2.25 (up from $2.10. They indicated the merger with Lucero would be immediately accretive.
VTS has a small payroll and their free cash flow is distributed to the stockholders (of which they have more than a quarter of the shares. These folks have cleverly organized a way of not paying themselves personal income. Rather they have distributed the companies free cash flow to the stockholders and subjected the income to a max tax raye of 20%.
Vitesse was a spin off which was initiated on January 1st of 2023. Since their spin off they have been paying a dividend of 50 cents per Q or $2.00 annually.
So far their stock price has been sideways after the initial offering at $13.90 in 2023. With a recent high of $28.41, it has the looks of a high level consolidation for a bit over 3 years.
I'm not sure of big price appreciation on this stock.
It appears to range a low of 20ish and a high of 28ish.
I've been selling puts on VTS with a strike price of $22.50 and $25.00. Hoping to get the $25's assigned to me and have the $22.50 expire to 00.00 and help me pay for the assigned shares.
Last week I had 1600 shares assigned a month early - which seldom happens.
On those 1600 shares my net purchase price was $24.24. With a $2.25 dividend, that is a dividend yield of 9.28%. That's a double in 7 years and 9 months.
If this is a high level consolidation, and following Ted's guide of long accumulation, it could well yield a very nice long term compounding at a rapid rate.
These are the kind of stocks you just hold and let it run. Afterall, one is getting an above market return rate of income coupled with a low tax rate.
I now have an initial position, but am liking the idea of a long tern buy and hold, with the intent of further accumulation via puts and taking advantage of the puts time decay helping me build cash for further accumulation.
Full disclosure: This stock is very much tied to the price of oil, which I like.
Oil has recently been very negatively viewed by those who endorsed the electrification of our economy.
It has recently had that negativity lifted and fossil fuels are now considered to be around much longer than when the false euphoria supposed that the internal combustion engine was destined to soon become obsolete.
I thought I'd put this recent stock up for the group's review. Combining a 9.28% dividend yield with put premium decay can build an annual return in the 15 to 20 percent return (with half of it at the lowest tax rate out there.
Best of trades
Bob |
