Hey Subscriber,

Ok, kids...it's that time of year to map out our 2022 game plan and playbook for our usual 3X-6X outperformance of the SP 500 index and 10X outperformance of the average hedge fund (that investors are paying 2% management fees and 20% of any profits for the opportunity to lose money versus just buying the QQQ index since 2010 should be a crime. But I digress).

We will start with our Ultra Income portfolio. 

Current Portfolio & Charts

While our 75% Energy/25% Secular Growth weighting in 2021 has paid off big time...many of our energy/MLPs investments we made into the teeth of the pandemic in April 2020 are now up over as much as 500% (DCP!) by 10/15/21.

It's sorta stunning--and that 3-5X capital appreciation does NOT include dividends! 

Note: Here are the charts of all our Ultra Growth and Ultra Income positions--NOTE: IF YOU SIGN UP to "Follow" this compilation of charts, you will get an email of the list at the end of every week...it is DEF worth seeing your positions from a technical analysis point of view (to know when it is best to start or ad a position at key support levels). 

Here are the links latest portfolio returns for 2021 and update "Buy Under" positions for Ultra Income and Ultra Growth portfolios.  

The Good News? With the S&P 500 up a respectable 20.1% this year, our blended return (75% UI/25% UG) and $21,261 in annual dividends (on $190,000 invested in UI positions) have our stock market wealth up 3.1X or 310% better than the S&P 500 including dividends! 

The Even Better News? 

Your portfolio could be up 4X MORE from your Ultra Income portfolio (with an 11.7% current annual yield) with our All-Access Ultra Option Income trades! 

How? Just subscribe and join us in the All-Access Trading Room, get in our Discord Trading room, and follow our "SELL This XYZ Put Option" and "Buy This Call" option trades, we have generated 10%-14% ADDITIONAL Income from our Ultra Income Portfolio EVERY 90 DAYS from our Ultra Income portfolio simply by selling "in the money" put options on our favorite Ultra Income shares at $1+ per share and keeping 90-100% of the premium! 

Note: Our All-Powerful Trading Room manager Shauna will start emailing our All-Access members our Ultra Income and Ultra Growth recommendations the day they are made for you all who don't log into our All-Access Discord server on a regular basis (which is NOT advisable!) 

Here is how our Ultra Option Income program works. For example, in mid-September 2021, our All-Access traders closed put options we sold/shorted in July on USAC AM DCP OMP and AMZA for 90%-100% profits and added @12%+ additional cash return to our positions which doubled our cash-on-cash dividend income!  

Then we doubled our UI income AGAIN with another 12% to our dividend yield for Q4 in early October.

 Adding 48%+ a year in option premium payments is literally quadrupling your Ultra Income dividend yields every year and in a long-term bull market for energy is like free money. What we see as a multi-year energy bull market with the structural long term supply and demand vs. supply imbalance now emerged globally (see below for the short version of our 2022-2025 carbon vs. green energy analysis), and energy stocks now reduced to just 3-4% of the S&P 500 and other major indexes, we see a LOT of green on our investing and trading screens for the next 12-18 months at least. 

OK--I can hear you and I read your texts asking "So tell me again how the All Access Ultra Income Dividend Doubler program is delivering such amazing results every month and quarter?

Simply said, we sold (technically we sell short) put options for $1-$2 per share in premium (an option contract is for 100 shares) most recently expired on Sept 17 worthless--and we kept all that option premium cash because all our Ultra Income positions went UP in value with the $75 oil/$5 nat gas prices we forecast in June (and a shout out to Jay Hatfield AMZA portfolio manager who gave us a similar forecast in May)!

The best news? This was at least the 4th time we have done the same thing since June 2020 for USAC/AM/AR/DCP/AMZA and the 3rd time we have got paid $100-$200 per option contract selling put options 60-90 days forward (i.e, "sell to open" put option order which is technically selling short put options that expire in 90 days where we keep the short sale proceeds).

It would be hard to figure out how many $millions of extra income our All-Access members have added to their portfolio's simply by opportunistically selling put options on our Ultra Income positions (however I did notice All-Access Member & my neighbor Phil T. with a new frigging Ferrari in his driveway over the weekend as I finished my Sunday road cycle workout--way to go Phil!).

Now without question, the poster child for earning this insane 13%+ quarterly premium $$$ income is of course USA Compressor (which hit a 52-week high last Friday as well alone with DCP).

Here is how the All-Access Ultra Option Income program works. For example, here is our last  December 2021 $15 USAC put option sale (in other words short position) from our wealth management master account from early October:

QTY  ASSET  PRICE  COST  Mkt Value  Gain ($)  Gain (%)
-100  Option   0.175     -8933   -1,750       +$7180     +80.41%

Why is the "Cost" -$8933? Because that is the short sale proceeds we were paid by the put buyer to take the "risk" of having to buy 10,000 shares of USAC at $15 goes into our brokerage account!

And remember--my actual "cost" to buy $USAC on DEC 17 would be $15 per share LESS the $8933 of put option premium I had already been paid--and I have done the same trade 4 times since May 2020 on different options strike prices from $8-$10-$13-$15 and now $17.50! 

PS: I like to double up my option gains, too.

How? I just take a little of that option income money and BUY out-of-the-money call options on our strongest energy infrastructure plays with the strongest bullish charts. For example, on that great run of OMP from $14 to $34--I SOLD put options that all expired worthless and ALSO cut my cost basis on OMP to zero with the profits buying out of the money call options on OMP with some of that premium.

Take USAC's $2.05 annual dividend. All-Accessors have almost quadrupled the $2.05 2021 dividend with an additional $4+ in USAC put option premium--now THAT BEATS working!  With just $100k in USAC at today's price--that is almost a 36% yield or $36,000 in dividends per year! 

FACT: Getting paid $40K+ cash money every 90 days selling in-the-money put options on AM USAC OMP GEL DCP MLPs in the second greatest oil and nat gas bull market since 2012-2014 is an amazing way to earn serious cash (and in a ROTH IRA, one day I will take that all that cash out tax-free--what a country!).  

But here is the secret to successful Ultra Option Income trading--I would LOVE to "have to" buy more USAC with a $2.05 dividend at a net cost of around $14 yet if you look at our 2021-2022 forecast for oil and natural gas prices (which has been dead right), the odds of seeing USAC back at $14 price in December are extremely low.

Note: IF USAC is a significant holding for you, dial-in for the conference Third Quarter 2021 Earnings Conference Call Tuesday, November 2. starting at 11 a.m. Eastern Time (10 a.m. Central Time) to discuss financial and operating results at 

Dial 800-367-2403 inside the U.S. and Canada at least 10 minutes before the call and ask for the USA Compression Earnings Call. Investors outside North America should dial 334-777-6978--the conference ID for both is 6819739.
 

Anyway, here is the current Bid/Ask for the USAC $17.50 Put Options (with USAC trading at $17.53 on Oct 15):

17.5 Put BID 0.90 ASK 1.05 LAST 0.90

We have similar short put trades our DCP/OMP/GEL/AM and we are long TQQQ November 19 135 call options as well (only up 78% so far.)
 
Overall, our 75% weighted Ultra Income portfolio is up +65% in 2021 (including dividends through 10/15/2021--click the highlighted link). We have updated the "Buy Unders" and are in process of adding new Target Prices 

We are also bringing out Ultra Option Income trades on our newest Ultra Income portfolio members

BP Midstream Partners LP SELL (Buy out offer from BP is below the current price SELL BPMP

ET Energy Transfer (owns 49% USAC) Buy Under $10.50 (opportunity to sell January $10 puts) ET

MPLX Buy Under $30 (opportunity to sell Nov. calls) MPLX

CS Crude Oil ETF Buy Under $5.50 (19% yield) no options USOI

CS Gold ETF Buy Under $5.50 SELL SELL GLDI

Magellan Midstream LP Buy Under $50 (opportunity to sell $50 puts) MMP

Chesapeake Granite Wash Trust Buy Under $.80 BPMP

Genesis Energy, LP. Buy Under $11.50 (opportunity to sell $11 puts) GEL

Bad Energy Decisions Matter: The 2022 Energy Crisis Is Here as Nations Struggle to Keep The Lights On Due to UnWoke Mother Nature & Premature Carbon Energy Evacuation

Many Transformity Research investors have quite literally made a fortune in our energy infrastructure investments in the last 20 months. It brings me little pleasure to announce that because of a number of man-made poor decisions and asymmetric political wokeism, we stand to make a lot more profits as the 2021-2022 energy crisis deepens.

Right now the only way out of this crisis is theUnited States energy investment and banking world returning to the grand days of stuffing $trillions into the pockets of major public oil and natural gas frackers so they could lose $10-$20 per barrel of energy but "make it up on volume". 

For a variety of reasons, the profitless public E&P Fracking Boom is not going to happen again... and thus we are in a structural bull market for energy and a longer-lasting Fracking Bust while the resurging world economy that still runs on 80% hydrocarbons for energy is barely hanging on. 

When we forecast $75 oil in June and $4 natural gas after it became clear the major oil and natural consumption countries were at least on a path to enough vaccination and natural immunity to re-open their economies, we knew there would be more pent-up demand for oil and natural gas and not NEAR enough marginal new production.

We knew that because in the United States--the world's new leader in energy production--the public companies who created the Great American Energy Fracking BOOM had lost $trillions in borrowed money in a race to the bottom of the energy fracking mountain. Wall Street and energy banks were not lending any more energy production money that would only serve to make them lose MORE money per barrel of oil or MMMbtu of natural gas.  

Said another way, the old rule of commodity economics--the cure for high priced energy is high priced energy required willing lenders and investors to finance unprofitable energy drilling and production. The folks with the money called uncle even before the pandemic hit the oil patch--but when combined with OPEC+ getting religion on oil production that skews oil prices higher at the margin, now the new marginal producer of oil and natural gas in the world (American energy industry) was cut off from their financial drug dealers.

The exception to this new paradigm is the PRIVATE E&P companies that don't answer to shareholders. Oil prices around $80 a barrel are once again spurring a revival of shale drilling in the Permian Basin of Texas and New Mexico aka America’s biggest oil field, where production is expected to return to pre-pandemic highs within weeks.

Only this time, the surge is being driven by private operators, rather than the publicly traded companies that fueled the previous booms. And they see little reason to slow things down.

Strong oil and natural gas demand has created an opening for closely held producers, most of whom are backed by private equity or family money, to ramp up output in West Texas and southeast New Mexico. With the other major U.S. shale basins either holding steady or declining, according to BloombergNEF, the surging growth in the Permian isn’t likely to risk upsetting OPEC or tanking crude prices as it did in previous shale booms—at least not yet.

“It’s a win for the privates without being a loss for the oil markets,” said Raoul LeBlanc, an analyst at IHS Markit Ltd. “The big takeaway is that private growth won’t ruin the party.”

Key Point: The United States hydrocarbon industry became the marginal supplier of oil and natural gas to the modern world--but the Fracking Bust in the United States was and is very real--and somehow most folks missed the memo that all the renewable energy in the world would not make a dent in the world's energy crisis 2021-2022.   

Then to add insult to injury,  mother nature and unrealistic timetables for conversion to renewable energy kicked in. Last year’s unusually cold winter drained European and Russian gas reserves significantly below normal reserves, and of course, Germany with the largest European economy has been phasing out nuclear power. The renewables that are meant to replace those sources aren’t yet close to picking up the slack. 

Then the wind in Norway and Europe stopped blowing. Wind turbines didn’t produce as expected with wind power at 20-year lows. Usually, we can blame exporter Russia for high natural gas prices, but not this time. And not to be outdone, Europe heads into winter with households paying five times the usual rate for their main heating source nat gas. 

Then there is China and India.  According to the India Times, "half of our 135 coal-fired power plants are running on fumes” because an intense monsoon season swamped our coal mines with rain and blocked key transport arteries with landslides.

Why not import more coal--America doesn't want ours. Well, importing coal is “not an option” according to the India Times since demand from China has driven global prices to record highs, with a 40 percent increase through August and September. The price of both oil and cooking gas is also up about 60 percent this year, and ordinary Indians are desperately trying to buy alternative fuel sources such as “cow dung and firewood.” 

I did not make that last part up. 

China is trying to make up for the loss of coal with imports and has unofficially eased its ban on Australian coal, imposed a year ago after Canberra called for an investigation into the origins of Covid-19. Authorities are scrambling to boost coal production to keep the heat on this winter.

Why? Mostly so angry Chinese citizens don’t turn on the government. Yet Beijing has been shutting power plants for years because of environmental concerns and slowing production at coal mines as part of a workers’ safety campaign. Financial Times says China’s shortage has “panicked businesses,” into hoarding. 

Some Chinese provinces are already suffering rolling blackouts, with companies rationing the use of factory equipment and instructing workers to take the stairs, not the elevator. And oh yea--the Winter Olympics are in China in early 2022--we can't have our guests freezing to death, right--"very bad face."

Then there is the newly Brexited U.K. which draws 70 percent of its electricity from coal, 90 percent of which is historically mined domestically. They were depending on 25% of their power from offshore windmills that unfortunately as mentioned are in a historic wind shortage.

And, as if they don't have enough problems already, Lebanon actually went completely dark for 24 hours this week, after its biggest power stations ran out of fuel and its whole grid failed. Power companies in Europe, India, and the U.S. are warning there could be outages in the months ahead (remember Texas last winter?)  

And then there are the unrealistic expectations of "green energy" to magically step in and replace hydrocarbon energy in years not decades.
 

Dear President Biden--IF You Want Gasoline Prices back to Below $3 a gallon, STOP THE WAR ON Energy Production & Distribution

Life sometimes has a funny way of teaching us the most important lessons.

Take the Biden Administration and their War on Hydrocarbon Energy. Falling poll numbers and $4 per gallon gas prices are sure to concentrate the presidential mind . . . and we need not look any further than this nominee for the ironic headline of the year from Politico this week: “ Biden team asks oil industry for help to tame gas prices.”

Really? For nine months President Biden has been pursuing policies to squeeze oil-and-gas producers to limit production and his most fervent eco-warriors pray every night that the $2 trillion American energy industry eventually goes out of business.

Yet even after the humiliation of begging OPEC+ in vain to boost oil production, Mr. Biden is now beseeching an American industry that he vilifies as destroying the planet to "come to America's rescue and save the day."

That prayer is all the more rich since at the presidential debate last year, Mr. Biden said he would “transition away from the oil industry.” After all, on his first day in office, Mr. Biden revoked the permit for the Keystone XL pipeline, which was supposed to carry oil from Canada and the Bakken Shale to refineries on the Gulf Coast. A week later he issued an order placing a moratorium on new oil-and-gas leases on federal lands and waters. Later on, thankfully a federal court blocked that moratorium, but the Interior Department got the presidential message. It approved a mere 171 drilling permits on federal lands in August, down 75% from April. The Biden Administration also moved to suspend existing leases in Alaska’s Arctic National Wildlife Refuge, and it initiated a fresh review of Alaska’s National Petroleum Reserve that could put it off-limits as well.

That's right; a “petroleum reserve” will be off-limits for . . . petroleum. You can't make this stuff up.

Mr. Biden also signed a Congressional resolution that removed the Trump Administration’s regulation on methane leaks from fossil-fuel production and flaring produced gas from fracked oil wells. The White House probably will replace it with a stringent standard that will make fracking a bit expensive (but I must admit that this regulation IS needed--that is another story for another rant.)

And make no mistake--the Biden Administration is also unleashing financial regulators against the industry. The Federal Reserve and other bureaucracies are looking to impose new rules on “climate-related financial risk,” as a May order from Mr. Biden put it. The purpose is to close off sources of funding and raise the cost of capital for the industry, and it will be a success if enacted.

Now even the Federal Energy Regulatory Commission, which oversees natural-gas pipelines, has signaled it probably will start requiring a climate study before approving even the smallest infrastructure upgrades. That will raise the bar for worthy projects while creating costs for climate mitigation. As one sign of the regulatory gantlet, two different proposed pipelines in the past two years have won a case at the Supreme Court and then been canceled anyway.

Key Point: So dear subscribers-- do you now understand why we are making SO MUCH MONEY investing in the scarce and highly regulated EXISTING North American energy collection and distribution companies and MLPs?

In part because the Biden War on Hydrocarbon Energy has been such a whopping success (filled your gas tank this week?) and there is no rest for the Woken Eco Warriors. Now in the wake of the global energy crisis, the Progressives in Congress want to use the Democratic reconciliation bill to punish the industry by doing away with expensing for intangible drilling costs, the oil depletion allowance, and more. The bill’s Clean Electricity Performance Program is expressly designed to punish fossil fuels, including natural gas.

In short, Mr. Biden and his party have sent signals that are loud and clear, in accord with the larger cultural message that fossil fuels are the new tobacco and the world doesn’t need them.

That isn’t true of course as Mr. Biden is finding out the hard way. Despite all the subsidies for renewables, fossil fuels provide about 80% of America’s energy. As the economy began to revive from the pandemic, it was only natural (pardon the pun) that demand for energy would rebound.

Yet somehow the Biden Administration forgets that via the energy fracking technology miracle, the U.S. has been the world’s leading oil producer for years and is ALREADY a major player in global supply and demand of natural gas. American crude-oil production in March 2020 was 12.8 million barrels a day, per the Energy Information Administration. That fell sharply when Covid hit, and now it’s barely inching back up. July’s output was only 11.3 million barrels a day, more than 10% below the pre-pandemic trend.

Bottom line: IF Mr. Biden is serious about wanting U.S. producers to help reduce prices at the pump and at home, he will change his punitive policies.

Let the Woke Anti-Energy Progressives ride their electric cars, bikes, and scooters to work and yoga lessons.

OK let's get back to getting rich (or richer) from the Great Energy Bull Market of 2020-2022.

Ultra Growth Portfolio update and new additions next up!

Toby