Want to know what those “Movable Pipelines” are that are being teased by the folks at Contrarian Profits? So did we … here’s how they teased the idea in their recent ad:
“The $5.8 Billion Reason the U.S. Government May Never Approve Another Pipeline…
“So much American oil is flowing out of the ground there aren’t enough pipelines to move it all. And the government takes years to approve more construction. Fed up, Big Oil is increasingly turning to a new, more lucrative way to ship oil. It’s five times faster than a pipeline, it takes days, not years, to set up – and it doesn’t need special approval.
“This breakthrough could make pipelines obsolete…
“And hand you a small fortune in the process.”
Sounds good, right?
Now, they don’t keep it a “deep, dark secret” forever — and you could probably figure out the “big picture” part yourself with no problem anyway, the “movable pipeline” is made up of rail cars.
This is something that’s been teased a few times before, and the big driving force behind the increased use of rail cars in the transportation of crude oil is really North Dakota — a place with a fine rail infrastructure (thanks, agriculture!) but not much pipeline capacity to take up all those millions of barrels flowing out of the Bakken Shale.
And it’s also a big part of the reason why Warren Buffett’s 2009 purchase of the Burlington Northern Santa Fe railroad, a seemingly risky and rare deal Berkshire Hathaway made to buy a public company at a premium price, turned out to be so brilliant — BNSF is transporting a lot of that oil, and it so happens that Berkshire also (separately) bought one of the major builders of tanker railcars which are, not surprisingly, also in very high demand (that’s Union Tank Car, part of the Marmon group of companies that Buffett bought control of in 2008).
So the stories have flowed about these railcar companies and railroads several times in the Gumshoe teaser Universe over the last couple years — but it’s been a few months since we saw one of these pitched, so it seemed a good time to have a look. Last time we hit this topic, if memory serves, was back in January when John Mauldin was launching his Yield Shark newsletter with a pitch for “Fiscal Cliff Winners” — remember when we thought the Fiscal Cliff was the worst thing that could happen? Ah, those were the days … Mauldin at the time was teasing American Railcar Industries (ARII), by the way, which had a nice run early in the year from $30 ($35 when Mauldin pitched it) to $45 or so and is now back at $40.
What’s the stock being pitched this time by Brett Owens? He’s selling his Contrarian Advantage newsletter, which I think is a new “entry level” letter from Contrarian Profits (they’ve changed their name so many times it’s a bit hard to keep track), and here’s how he teases the pick:
“You’ve might’ve heard about the Keystone XL pipeline… the paperwork still sits on President Obama’s desk.
“He says he’ll make a decision by the end of the year, but even then, it will take another two years to build.
“The lost time could mean billions in missed oil revenue.
“But here’s the thing…
“It doesn’t matter anymore.
“North Dakota no longer needs the pipeline….
“Enbridge’s $2.5 billion Sandpiper pipeline, designed to move more crude out of the Bakken, has met with difficulties.
“One potential customer told the U.S. Federal Energy Regulatory Commission that Sandpiper’s capacity ‘was not necessary in view of… pipeline alternatives.’
“Kinder Morgan, a major player in the pipeline business, already canceled a $2 billion project to build a pipeline from West Texas to California….
“The shocking truth is the U.S. government may never have to approve another pipeline again.
“That’s because pipelines are