MLP Trader

Long/short equity
MLP Trader
Long/short equity
Contributor since: 2008
You sell widgets for whatever you can get. That may only be $0.45. Eventually you'll stop making them. But in the meantime, you will sell them for whatever you can get.
Kinda of like my LINE stock. I need to sell it for $25 to balance my budget. Do you think that means that I'll sell it for $25?
Often with MLPs, if they don't pay a distribution, the GP doesn't get to collect any IDRs. So it may behoove them to gamble and continue paying distributions right until the point of bankruptcy.
In this case, I think MEMP may have dropped below the IDR threshold. So the only reason might be that they hope to collect a few payments on the units they hold before BK.
Get with it guys. The farmer doesn't price apples based on what he needs to feed his family, he prices them according to what he can get. What he needs to balance his budget is irrelevant.
Great call Citi!
Now I'm going to sell and incur broker fees that actually exceed the sale proceeds.
Oh no, here we go again with the idiotic "break-even" levels chart.
The actual break-even level for Saudi Arabia to keep pumping is less than $10/bbl. At any price above that they are still making money. The numbers for the others are a little higher, but not much.
Why not show the "break-even" level for the U.S. to balance its budget? That would probably be around $500/bbl. It would be about as relevant too.
I'm actually bullish on oil, but that chart has no bearing on where oil prices are headed.
You could be totally right shorting. But guess what? It's a really, really crowded trade:
http://bit.ly/2405z2k
That's 48% of the float short. You could be walking into the mother of all short squeezes. Good luck with that.
More reasons to hold the bonds instead of the stock (LP units).
MEMP's bonds are now trading at 28 cents on the dollar. MEMP could get a NO RISK rate of return of 27% by buying them back. It would be simply idiotic to do an acquisition while the bonds are that cheap.
But that speaks to a concern of mine: this management team has been more lucky than smart.
They are not going to do that. Read the presentation:
"Currently do not anticipate monetizing any portion of the hedge book given potential impacts to the revolver and liquidity"
That's not a point I was refuting. I merely said that this was not a solid report. In particular, viewing it in the context of EMRATIO and participation rate numbers that are near the worst levels in 30 years, it's damn poor. With participation numbers that poor, a "solid jobs report" would be 2-3X times larger.
What we're talking about here, is a very small increase off some really, really bad numbers.
You heard it heard it here first: I was .......(strains hard to pronounce word) WRONG! James was right. While he didn't and couldn't predict the massive decline in oil prices, the point that the model couldn't hold up under any stress was correct. Good job sticking to your guns.
Just so it's clear, let me spell it out for you. The percentage of people who need and want jobs is the percent of people working (EMRATIO) + all the people who want work (U6). That's 63+9.9 = 72.99. Multiply that by population growth and voila, you get 130K.
First off, there was no complaint. I simply said that this was "not a solid jobs report."
But here's where you go wrong:
"If we apply assume a pre-recession EPOP of 63 percent, this implies an increase in employment over the last year of 1,103,000"
This is a bad assumption, just like the assumption that only people "in the labor force" actually need jobs. Neither EMRATIO (what you call EPOP) nor the number of people "in the labor force" actually tracks the number of people who need or want jobs.
No I already have refuted it soundly. You rely on this supposition:
"...only people in the labor force actually need jobs"
which is demonstrably false. From the BLS:
"Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work."
In other words, if you are out of work and haven't looked in the past 4 weeks, you are "NOT in the labor force." Whether or not you NEED a job is immaterial. Indeed, a great many people in this category need and want jobs.
Who's ideological? Here are the facts:
http://bit.ly/1W848ZS
In case you wanted to make the silly Krugamanesque argument about aging baby boomers retiring, there's also this:
http://bit.ly/1W847oR
MEMP also still has bond interest payments. So the question is: why would you go for an 18% distribution, which could be eliminated tomorrow, when you can get a 25% bond yield that will get paid as long as the company is in business?
"Well, considering that only people in the labor force actually need jobs"
You clearly don't understand the definition of "in the labor force" as defined by the BLS.
There is a record number of people "not in the labor force" who desperately NEED and WANT jobs. It's just that, in the Obama economy they have given up looking. So they either stay on unemployment or contribute to the record high percentage of people collecting disability.
That's only the growth in the "labor force." Remember, that that number subtracts out all the discouraged workers who have given up on finding a job.
So unless you believe that the labor force should be an ever shrinking percent of the population, you need at least 130K/month.
I think another sort of revolver is in order here.
150K is NOT a "solid" jobs report. You need 130K just to keep up with population growth.
Dont quote me on this, but: I wish to !#$$ I had listened to James Kostohoryz.
Elliot,
I know. I'm just having a little fun. Nice to meet you in Orlando this year, BTW.
"In its research note, Raymond James goes on to explore this hypnosis. "
The editors of this article were clearly hypnotized.
Umm, that's precisely why EPD is doing so well. If NGLs were expensive, Petchems would be using Naphtha feedstock. Instead, they're building like crazy all over the Gulf coast, which is what will fuel EPDs growth.
At the end of the day, the value of a company is its discounted future stream of earnings. Whether those earnings are paid out as distributions, retained as cash, or used for buybacks doesn't matter that much.
For a long time, KMI and MLP investors had distribution illusion, thinking that a high distribution always means high earnings. Now they've been set straight. Companies like EPD that actually have earnings to fully cover their distributions and capex and companies that can't cover the distr. and capex (like OKS) will be re-priced accordingly.
"If Kinder Morgan has to readjust, expect its smaller peers to soon follow with similar actions."
That's just wrong in many instances. For example, EPD can happily pay its distribution AND fund growth capex out of excess retained DCF. It does not need to tap equity markets and it does not need to cut the distribution.
Ha. Spend your entire $1 million on a house in Palo Alto, CA (that will get you a whopping 1100 sq ft and 2 bdrms):
http://bit.ly/214gUNs
Oh. This is just a Condo, so you don't actually own the land its on. By the way, your property taxes will also be about $12,000/year.
"So let me get this straight....the one day reaction to the the FDA approval is the right call?"
Dude, lighten up. The author got it right in so far as FDA approval was already baked into the price. So downside risk outweighed the immediate upside. As it turned out, there was a "sell the news" reaction, exacerbated by the black box warning qualification.
In the short-run stock prices are all about sentiment.
Wow. You sure called that one right. The question now is whether the 30% sell-off is an over-reaction.
HK, Taiwan, and Japan are virtually rocks with no natural resources to speak of. Without nuclear energy, Japan would have to import almost all of its energy.
Yet these countries have grown their economies fabulously while socialist countries with lots of resources (e.g. India and most of eastern Europe and Africa) have failed miserably. For another case in point, take a look at what Vietnam's economy did after they abandoned socialism.
Yet faith-based fools continue to think that socialism is the solution.
You still have failed to deny that ex-colonial states like HK, Singapore, Malaysia that chose capitalism over socialism, have completely bypassed India. Most of these countries are much poorer in resources than India.
Why have you failed to deny it? Because you can't dispute the simple facts.
While all the capitalist countries have soared, India's standard of living is barely better than it was 50 years ago.
It is sad, that if India's rulers had not foolishly chosen socialism, that the per capita income of India would probably be around $50K now, instead of $5K.
"I think a healthy mix of socialism - or let's say a little bit of welfare-ism - is essential for all capitalist societies. India is not perfect in many ways, but its idea of mixing a bit of welfare into capitalism is sound at base."
Give me a break. India's per income after WWII was higher than Hong Kong's. After 60 years of Indian socialism and 60 years of HK free market capitalism, Hong Kong's income is 10X (that's right - 10X) bigger than India's. You call that sound at the base? I call it bloody stupid and a crime against hundreds of millions of people.