Seeking Alpha

Michael Connellan

 
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  • Alliance Resource: Strong Mid-Cap Income Holding In Core Industry [View article]
    Author's update: After this article the stock rose from $73 to $82 early in 2012, but then the entire coal sector began a precipitous slide through early April when it touched $52. This has been caused by a combination of EPA anti-coal proposed rules, coupled with the alternative utility fuel of natural gas going down in cost. Through it all ARLP has continued to pay and raise the dividend. As I write this the stock is at $57. Paraphrasing Wilbur Ross, 'there's little prospect of meaningful improvement in coal' for years to come. That said, one strategy would be waiting until the next ex-dividend date in early August, then selling ARLP. Including dividends, at $57 this will be about a 19% loss. Another approach is to simply hold for the very long term. This has appeal, but with the risk that ARLP is forced to reduce it's dividend in time when it's long term fixed rate contracts re-price, especially the one major utility customer.
    Jul 17 05:43 PM | Likes Like |Link to Comment
  • Alliance Resource Partners: Safe 7.5% Yield With Significant Unit Price Upside [View article]
    Good analysis, and I too like the stock. However, in ARLP's 10-K it states that a very large portion of their coal is sold to a single utility - Louisville Electric, if I remember correctly. If the utility has to shut down the unit due to EPA carbon regs, ARLP will lose what may be its single biggest customer. To date there's no indication they'll close the unit, but I believe this risk is weighing on the stock.
    Jun 26 10:40 PM | Likes Like |Link to Comment
  • Alliance Resource: Strong Mid-Cap Income Holding In Core Industry [View article]
    I would add to the risk element the fact that 4 customers make up a very significant share of ARLP's utility coal sales. Couple that with the EPA's recent ruling affecting older coal-fired generating stations and the very low price of natural gas as an alternative, and that adds an element of uncertainty for 2012 and beyond.
    Dec 23 02:18 PM | 1 Like Like |Link to Comment
  • Alliance Resource: Strong Mid-Cap Income Holding In Core Industry [View article]
    I like to keep it simple, and the core of the business is ARLP so that's what I invested in. Good luck with it!
    Dec 22 08:00 PM | 1 Like Like |Link to Comment
  • Alliance Resource: Strong Mid-Cap Income Holding In Core Industry [View article]
    AHGP's distributions ran up a lot faster - 27% v 13% - for the last 5 years but the way I read AHGP's SEC form 10-K, they're now at the maximum 48% of ARLP's distributions on the incentive plan so from here on it looks like the distributions increase at the same pace. So, I'll just stay in ARLP; their future looks good.
    Dec 21 12:49 PM | 1 Like Like |Link to Comment
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