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Albert Alfonso  

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  • Oil continues fall as demand concerns weigh [View news story]

    Not really. Its a record short position. Most traders are going to be naturally long given that they are using or trading the commodity. These are a "small" group of hedge funds who have massive short positions in the millions of barrels range, pure speculators.

    "The number of hedge funds with reported short positions is not especially high and well below the record 84 identified in March (

    But the average short position has almost tripled since June, from under 1 million barrels to almost 3 million, a record and nearly twice the 1.6 million barrels reported in March ("
    Aug 18, 2015. 09:11 AM | 2 Likes Like |Link to Comment
  • Oil continues fall as demand concerns weigh [View news story]
    I cannot help but roll by eyes when I see people trying to blame China for oil going lower. Hedge funds have gone short the commodity in record numbers recently:

    "Trade data shows that speculators have taken huge bets on further falls. Open interest for short positions in WTI prices - which shows the number of deals betting on lower prices - has almost doubled since the beginning of August to nearly 247,000, even as prices have slumped almost 15 percent."

    "The amount of queries we've received recently about leveraging bets on further price falls has been astonishing," one broker said.

    "Hedge funds and other money managers held short positions in WTI-linked futures and options equivalent to more than 193 million barrels of oil, according to the U.S. Commodity Futures Trading Commission.

    Money managers had never held a short position that large before, except for a brief period in March, when U.S. crude stockpiles were rising fast and there were fears storage space would run out."


    "The most remarkable feature of the recent drop in oil prices is that hedge funds have become more bearish, not less, the further prices have fallen.

    Increasing bearishness as prices fall is counterintuitive. In theory, there is more potential for prices to drop when prices are high than when they are already lower."
    Aug 18, 2015. 06:58 AM | 6 Likes Like |Link to Comment
  • Spectra Energy Enters The Battle For Williams [View article]
    I do not think so. Duke is a pure-play utility, I do not see them getting back into the midstream side.
    Aug 18, 2015. 06:50 AM | 2 Likes Like |Link to Comment
  • Williams Partners: A Special Situation Play With An 8%-Plus Yield [View article]
    So far, ETE has shown interest in WMB.

    SE has shown interest in WMB and WPZ

    KMI has shown interest, but is likely out due to anti-trust concerns.

    Conclusion: We're going to see a higher bid.
    Aug 17, 2015. 01:49 PM | Likes Like |Link to Comment
  • AT&T: DirecTV Related Guidance Failed To Impress [View article]
    According to yahoo, consensus for 2016 EPS is $2.74, inline with the updated guidance. Looks like the market was just looking for a reason to sell.
    Aug 13, 2015. 12:40 PM | 6 Likes Like |Link to Comment
  • Coca-Cola: End Of An Era? [View article]
    GMCR is a long-term investment. They are the clear market leader -- they have a pretty good chance of rebounding. One bad move does not undo years of dominance.
    Aug 13, 2015. 11:45 AM | 2 Likes Like |Link to Comment
  • Coca-Cola: End Of An Era? [View article]

    Folks are switching from soda to other beverages. But this trend is only occurring in the rich countries. Go to Africa or Latin American and you'll see tons of demand for soda. As those disposable incomes grow, KO will see sales grow as well (adjusted for forex).
    Aug 13, 2015. 11:43 AM | 3 Likes Like |Link to Comment
  • Coca-Cola: End Of An Era? [View article]
    KO is seeing higher volumes this year. This article did not even mention volumes. Indeed, even soda sales are holding up -- developing countries growth is offsetting declines from North America and Europe. Just because one product segment is seeing declines does not mean that the whole company is suffering.

    This is a very biased piece.
    Aug 13, 2015. 11:14 AM | 8 Likes Like |Link to Comment
  • New Residential Investment Corp. Is Now On Sale [View article]

    I agree 100%. The Fed wants to normalize interest rates, but it will take some time. Some mREIT equities are priced as if we'll see 3%+ short-term rates in the near future. Remember that the Fed made some of the same threats in late 2013, yet nothing happened.

    My guess: 50 to 100 bps higher by the end of 2016.
    Aug 13, 2015. 10:29 AM | Likes Like |Link to Comment
  • 56% Annual Return With LRR [View article]

    I just saw that this article suggested NSLP as a takeover play and wanted to add some relevant news.

    In an ideal world, people would do tons DD when putting capital to work on a new investment. However, many do not.
    Aug 13, 2015. 09:24 AM | Likes Like |Link to Comment
  • ONEOK Partners to sell 24.9M common units [View news story]
    Growth capital has a much higher rate of return than 10%. Assuming they get 15% (which is conservative):

    24.8M units at $30.17 = $748M

    $748M @ 10% = $74.8M per year in extra distributions

    $748M @ 15% = $112.2M per year

    accretion to DCF = $37.4M per year

    In addition, you can add in some debt to boost the return. Assuming they go 50/50 debt/equity and issue notes yielding 6%:

    $748M @ 6% = $44.9M in interest expense

    $748M @ 15% = $112.2M

    accretion to DCF = $67.3M per year

    In total, OKS would see DCF rise $104.7M per year, or ~$0.50 per unit. Per quarter, this owuld add $0.125 per unit. Given that the shortfall for Q2 was under $0.10 ($0.69 vs $0.79) 0.88x coverage, the coverage ratio would be boosted to 1.03x.

    Big factor is that it takes time to get to these levels. Many of the projects will likely be completed next year.
    Aug 13, 2015. 09:07 AM | 3 Likes Like |Link to Comment
  • ONEOK Partners to sell 24.9M common units [View news story]
    Its transferring capital from the stronger GP to the weaker LP. I would have thought some sort of preferred unit offer would have been more viable. This is dilutive short-term for OKS, but should help boost the coverage ratio above 1.00x for the second half.
    Aug 13, 2015. 08:35 AM | 1 Like Like |Link to Comment
  • 56% Annual Return With LRR [View article]
    I do not recommend buying the NSLP common. They noted during the Q2 report that they may be going under.

    "Going Concern

    The Partnership's financial statements have been prepared assuming that it will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As a result of the substantial drop in oil, natural gas and NGL prices, our revenue, profitability and cash flow have been significantly affected. Additionally, the Partnership has violated debt covenants on certain of its oilfield service related debt, which results in this debt being classified as current and could require us to have to pay amounts outstanding sooner than anticipated based on the original maturity. While we are evaluating strategic alternatives, there can be no assurance that the Partnership will be successful in these efforts or that it will have sufficient funds to cover its operational and financial obligations over the next twelve months, which raises substantial doubt as to its ability to continue as a going concern."
    Aug 13, 2015. 08:00 AM | 2 Likes Like |Link to Comment
  • ONEOK Continues To Be Dragged Down By Its MLP [View article]
    That news broke after this article was written. Seems like a good way to funnel cash from the GP to the MLP. OKS should have most of the capital it needs to complete its 2015 capital budget.
    Aug 13, 2015. 07:53 AM | Likes Like |Link to Comment
  • Williams - Another Strong Quarter In The Books [View article]
    WMB is cheaper based on both its expected dividend growth rate and price to "DCF" (cash available for dividends) multiple. In addition, the yield for WMB is higher compared to ETE.
    Aug 12, 2015. 09:56 PM | 1 Like Like |Link to Comment