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Today LINE announced a huge purchase of natural gas resources from Dominion. The bulk of the purchases (about $2.05 billion) is being funded through private equity placements of about $1.5 billion (which has already been secured at about $31.25/ share). The rest of the pruchase will be funded through a line of credit. The company plans to use its new financial clout to refinance a lot of their debt at better rates. The advantage of the purchase is that it will allow the company to raise its dividends to $2.52 a year starting in the fourth fiscal quarter of 2007. So if you purchase at the current price (about $36/share), then you can expect at least 3 quarters of of the old dividend rate ($2.28) and one of the new. This would be about $2.34 over the next year, which would yield 6.5%. Not a bad yield for what could be a growth stock. The advantage of master limited partnerships is that they offer great yields. LINE does this by hedging just about 100% of their future production, which means they have a secure cash flow. So even if the price of oil and gas collapse, LINE will not see a drop in its cash flow for at least 2 years. Thus, the dividend guidance is as secure as one can get. One note for those who may want to purchase LINE. Beware during the earnings releases for downside surprises. Becuase LINE hedges their production, they have to account for changes in the value of these hedges as profits(losses). When the price of oil goes up, which it has been doing, this leads to large paper losses and generally a negative EPS. These are only paper losses and do not affect the cash flow or the payouts.

BCRX is probably going to be known as a bird flu company as a result of its drug peramivir. That being said, this company is not a one trick pony and it currently has Phase II and Pivotal trials for its cancer drug (leukemia) Fodosine. While these trials had some set backs earlier in the year, the company believes that 2008 should see some form of Fodosine going to market. For all of the news about Fodosine, however, this stock is going to be moved by bird flu headlines. RIght now we are in a lull as to the bird flu mania and the stock has floundered and is in a nasty downtrend. Early this week I decided to buy back into BCRX for a couple of reasons. First, I still like the long-term potentials of both Peramivir and Fodosine, and the stock seems to have come close to hitting a bottom. While I do not pretend to think that I can time bottoms, the point is that the downside risk has been lessened by the recent collapse of the share price. Second, I think that bird flu headlines will pick up once again as flu season approaches. In addition, it is only a matter of time before bird flu reaches the US and that headline shock will have a dramatic effect on share price. In general, I would say buy BCRX for the bird flu headline upside, but stay long for the prospects of Peramivir and Fodosine.

Recently BAM has been receiving some notable press that has called it the next Berkshire. While that may or may not be true, it has generally returned over 20% a year. The stock price got a boost recently when it announced a 3:2 stock split, a spin-off of 40% of its infrastructure assets (which has not happened yet), and its push to be listed on the Euronext. Despite the spate of good news, the stock has been under pressure recently. I suspect that the interest rate concerns and sub-prime meltdown may hurt the stock in the short-term, but I would use this as a long-term entry point. I like BAM for some many of same reason I like MGU in that it operates in a business with a high barrier to entry. That being said, BAM has more real estate exposure than MGU, although the real estate is office properties and not residential. BAM is also like Berkshire in that it invests in areas that will produce consistent and high rates of returns (which I guess explains the comparisons to Berkshire). Of all the recent announcements, I think the proposed listing on the Euronext is most intriguing. First, it reinforces the view that BAM is a company with a global focus. Second, it vastly increases the number of potential investors, which will increase the share price, i.e. increase demand and keep supply constant will lead to an increase in price. All in all, I would not be surprised to see BAM pullback from its current levels. I am a little worried that it has twice failed to break back above its 50-day SMA. That being said the long-term uptrend is still in place, although it really needs to hold $38.30. A break below that level will probably lead to a testing of the 200-day SMA at $34.14. So my advice if you want to build a position is buy half now. If BAM breaks above the 50-day MA purchase the other half. If it breaks below $38.30 wait for a test of the 200-day MA to purchase the other half.

The Macquarie Global Infrastructure Total Return Fund is a closed end mutual fund that invests in global infrastructure. Some of its top holdings include Charles de Gaulle Airport in Paris, Enbridge Energy, and Spark Infrstructure. By industry group its largest positions are in pipelines (25%), electricity and gas distribution (23%), electric utilities (15%), airports (9%), and toll roads (8%). Why would one want to invest in this closed end mutual fund? Barriers to entry. In the long-run, according to economic theory, profits only accrue to companies in industries with high barriers to entry. If an industry has a low barrier to entry and high profits, then it will be flooded with start-ups which lowers everyones profits. Companies will stop entering an industry when the expected profits are equal to the barrier to entry. As such, industries with high barriers to entry will maintain high profit margins and fewer competitors. Infrastructure assets (think massive public works) have some of the highest barriers to entry (who has the capital to build another airport in Paris?) So my essential point is that an investment in infrastructure will produce long-term (and consistent) profits. Of all the options to invest in this asset class, which are generally few, Macquarie offers some of the best options (although Brookfield Asset Management will soon be spinning off a 40% stake in its infrastructure assets). I see MGU with its global reach as a foundation for my portfolio. It will produce both price apprecation (22% YTD) and a solid yield (currently at 4.76%). Not bad for a fairly risk free holding (0.82 Beta).

MO is an incredible long-term performing stock (returning about 20% a year since 1957). The spin-off of Kraft this year provided a nice boost, but the shares have been in a tight trading range for the last two months. I believe that most investors are waiting for the much anticipated split of MO into its US business and international business. Once this is announced (most likely in the next 3-6 months, although I would not be surprised to see something in the next earnings release), I would expect another jump in price. Once the split is announced, my game plan is to swap out of PM USA and into the PM international. The international portion of the split would have higher growth and would not have the litigation liabilities of PM USA. While I would suspect that PM international would provide a lower dividend yield, I would be willing to accept that for the higher growth prospects and lower litigation risk.

I have only recently added GEO to my portfolio. For those of you who don't know the company, GEO operates prisons for the federal, state, and local governments. This is a highly profitable and growing industry as the prison system is already overcrowded and the expected number of prisoners is expected to increase faster than the space in prisons. State and local governments are having a difficult time keeping up with the demands and are outsourcing the job to private companies like GEO. Aside from the long-term need for a company like GEO, this industry is essentially recession proof. In fact, a collapse in the economy would actual increase demand making even more profits for GEO. So in the current expanding economiy, the demand for prison space is high and even if the economy reverses course GEOs profits may be even higher. Two other publically traded companies operate in this space with CRN being the largest. I like GEO because being a smaller player it can grow faster for longer, but perhaps more importantly GEO has recently entered into the mental hospital business. While not a large part of GEO's revenue, it is expanding its business to run mental health hospitals for cash starved governments. I believe this is a critical new growth area for GEO and it is currently the only publically traded company that is in this area. As such it will reap the benefits of being the first mover. In general, GEO is in an essentially recession proof industry that will sport double digit profit gains for GEO. In addition, its foray into the mental health business is a great are of expansion and should reap great returns in the future. In many ways, I have no fear in owning GEO (although one should always have a little fear). Buy GEO, hold it long-term, and reap the benefits.

If you believe that your portfolio requires exposure to gold, then Seabridge (SA) is a must own. Most gold companies take gold flow (i.e. mining gold in the ground) and turn it into cash flow (selling it) for investors. Seabridge takes the opposite approach and takes cash flow (from issuing stock) and turns it into gold flow (gold prospects in the ground). The stated goal of the management (one that they have always accomplished) is to ensure that each share of Seabridge is backed by .50 oz of gold in the ground. How do they do this? Generally when the price of gold is low, they sell shares to purchase lands where mining is not financially viable. They then use their cash to drill the lands and expand the inferred and proven resources. As such, even though they dilute shareholder value by issuing shares for capital expenditures, they maintain the ratio by expanding the gold reserves on their properties. When the price of gold increases and makes their lands profitable to mine, Seabridge plans on either selling the lands to other companies or entering into a joint venture. This model tends to make Seabridge highly leveraged to the price of gold. As such, if you think that gold is going up, you will get outsized returns from SA. I also believe that now is a good time to invest in SA. While the price has run-up recently, I am convinced that they will be announcing a joint venture in the next 6-9 months. I firmly believe that a joint venture could easily add $10-$15 a share onto the price. Regardless, if you want exposure to gold, I think Seabridge offers a great opportunity.