Baytex Energy Offers A 6.90% Yield And Production Growth [View article]
Hi,
I actually used to be long $PBA last year. One of my worst mistakes was selling them. While a bit dated, here is my article about them from January: http://seekingalpha.co...
key stat from that article: 50% of Alberta's conventional crude oil production and 30% of NGL is transported on Pembina's systems.
Penn West: Is A Dividend Cut Coming? [View article]
Hi Michael,
I am pretty sure that if the dividend is lowered that the first target will be debt. There is a glut of oil up there, so I do not see PWE increasing production just to have to sell the oil at a $30+ discount...
Penn West: Is A Dividend Cut Coming? [View article]
Hi,
Cash flow is indeed used to pay for capital spending. If PWE lowers the dividend the issue will then be how they spend this extra cash flow. Drilling for light oil in Canada is just not as profitable as it used to be...
Penn West: Is A Dividend Cut Coming? [View article]
Hi,
The case can be made for both a severe 66% cut and a smaller 20% cut:
66% cut
Assuming that PWE's full year FFO remains similar to Q1, the company would generate about $1.07B in FFO in 2013. Capex was estimated at $900M, with an optional $300M if energy prices recover. Assuming PWE only spends $900M, this would leave about $170M for dividends, or about $0.35 per share ( about $0.09 per quarter). This is probably the worst case scenario.
20% cut
Now since PWE has already spent $427M in capital spending in Q1, this leaves about $473M for the remaining 3 quarters, or $158M per quarter. Assuming similar Q1 2013 FFO of $267M per quarter, this leaves $109M, or $0.22 per share, for the dividend.
If I were to guess, I think it may be reduced 50%. This would be similar to reductions that ERF and PGH did.
Northern Tier Energy: A Refinery MLP With A 19% Yield [View article]
Hi,
When annualizing the last 3 quarters of distributions, the yield for NTI is about 20.2%. What will happen when the Q2 distribution is half that? I would double my position in NTI if they had a more stable distribution.
Annaly Capital Faces Continued Pressure On Its Net Spread [View article]
Hi Bryce,
Here is a quick and somewhat simple way of finding out what a mREIT really makes in net interest income, or NII: ((Net spread) X Leverage) + yield on interest bearing securities) X Net asset value.
Let us figure this out for NLY: The spread was 0.91% and the leverage was 6.6X. Multiply and we get: 6.006%. Next we add the yield on interest bearing securities, which was 2.72%. This leads to 8.726%. We multiply this with the NAV of $15.19. This leads to about $1.33. Per quarter, this leads to about $0.33 of NII.
How does NLY payout more in dividends than NII? They realize gains from sales of MBS and then pay this out.
Now, to figure out total return: We add the NII to the change in NAV. NLY loss $0.66 per share in NAV, so this leads to a negative $0.33 per share, or -8.6% annualized.
Note: This method will only a give you only very rough estimates.
Annaly Capital Faces Continued Pressure On Its Net Spread [View article]
Hi Bruce,
I would agree with you about the total return aspect of mREITs. I was actually long AGNC for most of 2011 and 2012 and took profits at around $35 per share. My rule with high yields is that if I can get 1 years worth of dividends or more in capital gains I will sell. I rebought AGNC this year and my new cost basis is $31 sans dividends. mREITs are out of favor now, however if the economy starts to stutter again they will be the place to be.
As an aside: A 10% capital loss is nothing. These are high risk investments and are also highly levered. How low do you think the general markets will fall if we slip back into recession? 10%, 15%, 20%?
Annaly Capital Faces Continued Pressure On Its Net Spread [View article]
Hi Bryce,
IMO, these gains and losses in MBS are mostly 'noise'. What an investor should really focus on is the amount of income these assets produce. That is why I included NLY's ROE and focused on AGNC's ROE. If you remove this 'noise' you will see that AGNC actually generate a decent ROE in Q1 while NLY did not. However, NLY will see a big boost once it has merged with CXS.
Baytex Energy Offers A 6.90% Yield And Production Growth [View article]
I actually used to be long $PBA last year. One of my worst mistakes was selling them. While a bit dated, here is my article about them from January: http://seekingalpha.co...
key stat from that article: 50% of Alberta's conventional crude oil production and 30% of NGL is transported on Pembina's systems.
Penn West: Is A Dividend Cut Coming? [View article]
I am pretty sure that if the dividend is lowered that the first target will be debt. There is a glut of oil up there, so I do not see PWE increasing production just to have to sell the oil at a $30+ discount...
Penn West: Is A Dividend Cut Coming? [View article]
Cash flow is indeed used to pay for capital spending. If PWE lowers the dividend the issue will then be how they spend this extra cash flow. Drilling for light oil in Canada is just not as profitable as it used to be...
Penn West: Is A Dividend Cut Coming? [View article]
Thanks for finding that error. It should be fixed fairly soon.
Penn West: Is A Dividend Cut Coming? [View article]
Please look at my post above. Also, I did mention that PWE spent about 47% of its FY capital budget.
Penn West: Is A Dividend Cut Coming? [View article]
The case can be made for both a severe 66% cut and a smaller 20% cut:
66% cut
Assuming that PWE's full year FFO remains similar to Q1, the company would generate about $1.07B in FFO in 2013. Capex was estimated at $900M, with an optional $300M if energy prices recover. Assuming PWE only spends $900M, this would leave about $170M for dividends, or about $0.35 per share ( about $0.09 per quarter). This is probably the worst case scenario.
20% cut
Now since PWE has already spent $427M in capital spending in Q1, this leaves about $473M for the remaining 3 quarters, or $158M per quarter. Assuming similar Q1 2013 FFO of $267M per quarter, this leaves $109M, or $0.22 per share, for the dividend.
If I were to guess, I think it may be reduced 50%. This would be similar to reductions that ERF and PGH did.
Northern Tier Energy: A Refinery MLP With A 19% Yield [View article]
When annualizing the last 3 quarters of distributions, the yield for NTI is about 20.2%. What will happen when the Q2 distribution is half that? I would double my position in NTI if they had a more stable distribution.
Northern Tier Energy: A Refinery MLP With A 19% Yield [View article]
Another stock I have been watching is MMLP. For its size, its very diverse and has a great yield. Slightly overpriced now, but it should come in.
Northern Tier Energy: A Refinery MLP With A 19% Yield [View article]
TY for providing those links on MLP resources.
Annaly Capital Faces Continued Pressure On Its Net Spread [View article]
Here is a quick and somewhat simple way of finding out what a mREIT really makes in net interest income, or NII: ((Net spread) X Leverage) + yield on interest bearing securities) X Net asset value.
Let us figure this out for NLY: The spread was 0.91% and the leverage was 6.6X. Multiply and we get: 6.006%. Next we add the yield on interest bearing securities, which was 2.72%. This leads to 8.726%. We multiply this with the NAV of $15.19. This leads to about $1.33. Per quarter, this leads to about $0.33 of NII.
How does NLY payout more in dividends than NII? They realize gains from sales of MBS and then pay this out.
Now, to figure out total return: We add the NII to the change in NAV. NLY loss $0.66 per share in NAV, so this leads to a negative $0.33 per share, or -8.6% annualized.
Note: This method will only a give you only very rough estimates.
Annaly Capital Faces Continued Pressure On Its Net Spread [View article]
I am sure you know this but, EPS is not a reliable metric for NLY or any other mREIT.
Annaly Capital Faces Continued Pressure On Its Net Spread [View article]
I would agree with you about the total return aspect of mREITs. I was actually long AGNC for most of 2011 and 2012 and took profits at around $35 per share. My rule with high yields is that if I can get 1 years worth of dividends or more in capital gains I will sell. I rebought AGNC this year and my new cost basis is $31 sans dividends. mREITs are out of favor now, however if the economy starts to stutter again they will be the place to be.
As an aside: A 10% capital loss is nothing. These are high risk investments and are also highly levered. How low do you think the general markets will fall if we slip back into recession? 10%, 15%, 20%?
Annaly Capital Faces Continued Pressure On Its Net Spread [View article]
Annaly Capital Faces Continued Pressure On Its Net Spread [View article]
IMO, these gains and losses in MBS are mostly 'noise'. What an investor should really focus on is the amount of income these assets produce. That is why I included NLY's ROE and focused on AGNC's ROE. If you remove this 'noise' you will see that AGNC actually generate a decent ROE in Q1 while NLY did not. However, NLY will see a big boost once it has merged with CXS.
Annaly Capital Faces Continued Pressure On Its Net Spread [View article]