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Michael Connellan

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  • Seadrill: Now An Attractive 11% Yielder [View article]
    At 11 pct the market is telling us this is a very high risk holding. The key support for the dividend will come from Jon Fredericksen whose family trust owns 24 pct, and counts on the income.
    Apr 2 08:13 PM | 6 Likes Like |Link to Comment
  • Vanguard Natural Resources: The Best E&P MLP Just Keeps Getting Better [View article]
    I like VNR and own it, but the strategy shift to development and higher cap ex really concerns me since even just recently the management was telling a different story. This is a higher risk approach, and changes the beta.
    Mar 16 05:20 PM | 2 Likes Like |Link to Comment
  • Seadrill's Path To Problems [View article]
    SDRL now has about $13.2 billion in total debt, vs $2.5 EBITDA - a high 5.3x ratio. Unless they can sharply increase EBITDA or sell assets to reduce debt, either their bankers or the capital markets are going to start rationing their access to debt. Keep in mind that this company is controlled by John Fredriksen, as is Golar. Because his family trust lives off this dividend he'll keep the dividend as long as possible but ultimately markets will prevail. Sell SDRL now - they're quickly getting into a checkmate situation which is going to result in a dividend cut.
    Feb 19 01:00 PM | 1 Like Like |Link to Comment
  • Vanguard Natural Resources: Acquisition Marks A Big Change [View article]
    I have liked VNR's straightforward business plan of acquiring mature producing properties requiring only modest cap ex. It always concerns me when a company makes a big investment that's inconsistent with it's historically successful bus plan. Therefore I'm concerned about VNR taking on 970 to-be-drilled sites requiring large cap ex dollars. Anadarko is no dumb seller, too. If the theory proves correct it'll be a winner; if not, the dividend - or at least future dividend increases - will be at risk.
    Feb 16 06:44 PM | 1 Like Like |Link to Comment
  • SeaDrill A 10.5%-Yielding Bargain [View article]
    Very nicely presented article. However, through the years and some discouraging experiences, I long ago concluded that when a stock yields 10 pct or more, just sell it. That's an abnormally high yield and it's highly likely there are forces at play we don't yet understand. I've liked this stock in the past but at this point - Sell!
    Feb 3 04:55 PM | 1 Like Like |Link to Comment
  • Vanguard Natural Resources - Another Sizable Deal For This Monthly Paycheck Provider [View article]
    Hivoltage - That's a very good point, plus rip2451's comment. I own VNR, and buy more when it dips down at times, and expect to hold it for many years.
    Jan 7 04:28 PM | 2 Likes Like |Link to Comment
  • Vanguard Natural Resources - Another Sizable Deal For This Monthly Paycheck Provider [View article]
    I'm beginning to be concerned about VNR's debt level. Right now it's a very manageable 3.3X EBITDA but after this acquisition total debt will be approximately $1.5 Billion, 5.0X EBITDA. If rates rise significantly it will create additional pressure. I'd like to see VNR sell stock and reduce debt levels.
    Jan 6 10:36 AM | 3 Likes Like |Link to Comment
  • Jardine Matheson: High Quality At A Low Price [View article]
    Thanks for the FMV clarification. On revenue of $31.6 billion Yahoo stats is showing EBITDA of $4.17 billion and a TEV of $15.03 billion for a multiple of 3.61x.
    Dec 27 11:07 AM | 1 Like Like |Link to Comment
  • Jardine Matheson: High Quality At A Low Price [View article]
    Looking at the Balance Sheet values of the real estate is particularly important with JM, partly because I believe HK Land has held significant parts of Central HK for over 100 years. While not a Chartered Accountant, I suspect the current value of the real estate may be much higher than NAV which makes JMHLY JSHLY even better values!
    Dec 26 04:33 PM | Likes Like |Link to Comment
  • Jardine Matheson: High Quality At A Low Price [View article]
    At just 3.6x EBITDA and with strong exposure to growing Indonesia, JSHLY is a solid long term buy!
    Dec 26 04:06 PM | Likes Like |Link to Comment
  • Vanguard Natural Resources: Why I'm Long This High Yielding Energy Play [View article]
    Zorro - being dependent on the capital markets is markedly different from a ponzi scheme. Many, many companies operate this way. REITs, for example, have to pay out 90 pct of net income so they generally cannot fund themselves out of cash flow and must go to the markets. While most cap ex lines in the Statement don't differentiate between maint and growth cap ex, if you instead study the MD&A section of the 10-K - the absolute best way to know what's really going on - you can generally make the differentiation.

    I don't think a DCF analysis is useful for VNR; the result is totally dependent on your product pricing assumptions and the discount rate, and each is highly susceptible to errors. Companies like VNR are actually a lot simpler, I think. The investment IRR, if you hold the stock indefinitely, is simply equal to the current dividend yield plus the growth rate of the dividend.
    Sep 13 01:18 PM | 1 Like Like |Link to Comment
  • Vanguard Natural Resources: Why I'm Long This High Yielding Energy Play [View article]
    Good point about the 'tax shield'! In 2012 VNR reported a loss which indicates, I think, that the entire dividend was tax-deferred for the year.
    Sep 13 12:03 PM | 2 Likes Like |Link to Comment
  • Vanguard Natural Resources: Why I'm Long This High Yielding Energy Play [View article]
    I like VNR and in fact I too own it. But it's very important to realize that there is not enough cash to pay the dividend after subtracting maintenance cap ex (differentiated from acquisitions). VNR depends on its ability to either sell stock or borrow money to get the cash to pay the dividend. This clearly shows in the most important financial statement, the Statement of Cash Flows. Net Income means little compared to cash flow.
    Sep 13 11:59 AM | 1 Like Like |Link to Comment
  • Looking For Dividend Bargains In An Overheated Market [View article]
    Good names! You may also want to take a look at Zurich Insurance "ZURVY", and W P Carey "WPC".
    Aug 1 02:11 PM | Likes Like |Link to Comment
  • Linn Energy: How Low Can It Go? [View article]
    LINE's basic problem seems very straightforward: the company is not earning enough cash to support the dividend. Valuation is of little relevance; cash is the determinant. The company is selling stock and/or borrowing money to pay the dividends. The Statement of Cash Flows clearly tells the tale. 60 pct of the capitalization is debt so they're reaching a limit there. The more the stock drops the harder it is to sell stock to pay the dividend. The end game is clear unless operations improve markedly - LINE will be forced to reduce or eliminate the dividend. Avoid the stock.
    Jul 3 01:39 AM | 2 Likes Like |Link to Comment
COMMENTS STATS
112 Comments
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