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Philip Trinder  

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  • Capital Product Partners LP: A Dividend Investor's Dream (>10% Yield) At A Deep Value Price [View article]
    Emily,

    Thanks for the response. It's totally up to you, if you think it is worth it for you to correct your model then please do. From my years as an energy investment banker I have a habit of looking extremely closely at analyst models. You also need to be sure that you are modeling the Incentive Distribution Rights correctly for CPLP when you start increasing the distribution in future years. The tips and corrections I have pointed out will materially change your target price of $18.

    Best Regards,
    Phil
    May 15, 2015. 11:37 AM | 1 Like Like |Link to Comment
  • Hi-Crush Is Best Of Breed [View article]
    Alex,

    Does HCLP have Incentive Distribution Rights that it pays to its General Partner?

    Best Regards,
    Phil
    May 14, 2015. 11:30 AM | Likes Like |Link to Comment
  • AMZA: 9% Yield With No K-1 And Few Concerns About Interest Rates [View article]
    You can find more detailed info on holdings here: http://bit.ly/1FlySCW

    Also InfraCap MLP ETF homepage here: http://bit.ly/1FlyPY1
    May 13, 2015. 09:48 PM | 1 Like Like |Link to Comment
  • Hi-Crush Is Best Of Breed [View article]
    Alex,

    Do you think that HCLP is set-up to pay Variable Distributions like EMES?

    Best Regards,
    Phil
    May 13, 2015. 12:44 PM | Likes Like |Link to Comment
  • 3 Good Reasons To Sell BP Prudhoe Bay Royalty Trust [View article]
    Eddie / Million$Man,

    1. "Short sellers don't make up this big move." << Right, obviously the total trading volume of BPT since April 15 has been greater than the total BPT short position as of April 15, so even assuming 100% of the short position has been covered there must be some "long investors" buying BPT.

    2. "You fail to see that oil has rebounded strongly up 45% from the lows and BPT is an oil sensitive investment." << I am a very focused investor in energy so I am always very aware of what commodity prices are doing. Also I think most people understand that since the BPT Trust Conveyance only covers oil and condensate volumes and the royalty payment is then calculated based on the WTI oil price then that means that BPT is an oil sensitive investment.

    3. "Oil is marching higher and is being pushed higher in many ways. I guess your models didn't predict that factor." << The WTI price is simply an input into my BPT model so what matters for the next distribution will be the average WTI price for the second calendar quarter. I don't think I can exactly predict that average so I will wait and continue to collect WTI spot price data at Cushing, OK from the EIA website. Average spot WTI prices have so far averaged higher than 1Q15 so it does seem likely that the next BPT distributions will be higher than the one just paid in April.

    4. "LMAO again." << I'm glad to hear that you are always in such a happy and jovial mood!!

    Based on some of your other recent comments, I think you stated that you fully exited your BPT position "near $100," so it seems like you have not had any investment in BPT at all since June / July 2014. I'm assuming something in your modeling / valuation of BPT led you to exit your investment at that very opportune time. I look forward to including your estimate in the next quarterly game of "Guess the BPT Distribution."

    Best Regards,
    Phil
    May 5, 2015. 05:48 PM | Likes Like |Link to Comment
  • 3 Good Reasons To Sell BP Prudhoe Bay Royalty Trust [View article]
    I'm getting quoted an estimate of 44.25%, so it does seem like some shorts have been covering while the unit price has been trending upwards.
    May 5, 2015. 03:38 PM | Likes Like |Link to Comment
  • Investing In MLP Refineries For Higher Returns [View article]
    Tom,

    You make this statement:

    "These investments pay a distribution each quarter based on the earned income and are required to pay out 90% of earnings to investors to retain their tax-free status as an MLP."

    That statement is incorrect, perhaps you are confusing the tax code covering MLPs with the tax code covering REITs. The tax code section governing MLPs is Section 7704, here is a link to a copy of that section:

    http://bit.ly/1ciJLci

    The key aspect is that to be treated as an "MLP" for tax purposes the requirement states that 90 percent or more of the gross income of such partnership for such taxable year consists of qualifying income.

    So to clarify for the refining MLPs, they focus on paying out 100% of their Distributable Cash Flow they do not "focus on paying out 90% or more of their earned income." Since refining crack spreads are incredibly volatile these Refining MLPs are set up to pay a variable distribution each quarter.

    Best Regards,
    Phil
    May 5, 2015. 02:45 PM | 7 Likes Like |Link to Comment
  • Firing Up For Enviva Partners' IPO [View article]
    Don,

    I agree, it does appear to be off to a good start.

    Best Regards,
    Phil
    Apr 30, 2015. 11:13 AM | Likes Like |Link to Comment
  • Firing Up For Enviva Partners' IPO [View article]
    Hello Don,

    Did you get to attend an IPO roadshow presentation by any chance? If so, during Q&A did anyone try and get a little more color around what distribution growth rate management thinks they can achieve?

    I watched the online recorded roadshow and they hinted at "top tier distribution growth" so I am wondering how others may interpret that into a specific estimated three year CAGR for their distributions.

    Best Regards,
    Phil
    Apr 29, 2015. 11:01 AM | Likes Like |Link to Comment
  • 3 Good Reasons To Sell BP Prudhoe Bay Royalty Trust [View article]
    Hey Guys,

    My broker is quoting an Estimated Annual Interest Cost to borrow BPT of 70% today (down from 72% on Friday).

    I think part of the reason BPT is always Hard To Borrow is possibly that most of the units are held by Retail investors in IRAs (so automatically a Cash Account and not a Margin account) or held specifically in Cash Accounts all the time.

    There may not be enough large holders to be able to bother to collude on moving BPT from Margin to Cash in an attempt to squeeze shorts. I received a run down of the "Top Institutional Holders" as of December 31, 2014 and it covered the top 64 Institutions and they only amounted to 2.384 million or ~11.1% of the total outstanding units. The 64th Institution on the list only held 5,000 units (verified here: http://bit.ly/1z6LYkV).

    Using the data from the last 10-K there are an additional 296 Institutions that must hold less than 5,000 units each (assumes that 1 "Holder" is every retail investor held in "Street Name" for a total of 361 Holders of Record, see page 28 of 10-K). There were only 10 Institutions that held ~100,000 units or more each.

    What do you guys think is the average number of units held by retail investors in BPT?

    If we assume that the second group of Institutions (the 296) have an average position of 3,000 units (just a wild guess on my part) then that leaves ~18.1 million units in Retail hands. Based on various average Retail position sizes that would mean estimated total numbers of retail holders as follows:

    Assumed Avg Position / Estimated Total # of Retail Holders
    200 / 90,638
    300 / 60,426
    400 / 45,319
    500 / 36,255
    600 / 30,213
    700 / 25,897
    800 / 22,660
    900 / 20,142
    1,000 / 18,128

    So clearly an unknowable set of assumptions but I was tinkering around with some data and then making assumptions to try and get a feel for how many retail investors are actually holding BPT. I have no way of knowing what the average retail position would be but maybe it is somewhere <500 units?

    Best Regards,
    Phil
    Apr 27, 2015. 02:43 PM | Likes Like |Link to Comment
  • Recent Buy: Energy Transfer Partners [View article]
    Ray,

    It's not THAT complex, look at this simple org chart: http://1.usa.gov/1KahNKL

    I kid, I kid, any time your "basic" organizational chart includes five* different publicly traded entities that counts as complex. ;-)

    Brendan,

    You may seriously want to look at also owning ETE as well as ETP since ETE owns the Incentive Distribution Rights for ETP.

    Best Regards,
    Phil

    *Pre-RGP transaction
    Apr 23, 2015. 05:45 PM | 3 Likes Like |Link to Comment
  • Capital Product Partners LP: A Dividend Investor's Dream (>10% Yield) At A Deep Value Price [View article]
    Darren,

    I actually had an assumed growth rate of 2.5% per annum so if they step-up the distribution by $0.002 each quarter going forwards that would be ~3.4% growth after the fourth increase (slightly ahead of my estimates). Guess, we'll see how the market in aggregate thinks about it tomorrow (and also when they announce the next distribution to see if up $0.002 is the new pattern).
    After 17 quarters of not increasing the distribution, I view starting to increase it again as positive signaling.
    Emily,
    Have you had a chance to revisit your model?
    Best Regards,
    Phil
    Apr 23, 2015. 05:32 PM | Likes Like |Link to Comment
  • Capital Product Partners LP: A Dividend Investor's Dream (>10% Yield) At A Deep Value Price [View article]
    CPLP increases distribution 0.9% from $0.2325 to $0.2345.

    http://yhoo.it/1K9ZQfi
    Apr 23, 2015. 04:15 PM | Likes Like |Link to Comment
  • Rich Kinder: 'The Kinder Morgan Game Plan Is Still On Track' [View article]
    UP,

    Yes, that would be where I would start with my tax advisers, that is of course a slight oversimplification due to all of the other items that flow through the K-1s each year (which is why EVERYONE who buys any K-1 investment needs to keep EVERY SINGLE K-1 they ever receive).

    So assuming that is the best case corrected outcome, your possible tax savings would be:

    OLD ESTIMATE
    $175,000 * 39.6% = $69,300
    $175,000 * 23.8% = $41,650
    Total Tax = $110,950

    BEST CASE ESTIMATE
    $175,000 - $104,078 =
    $70,922 (Reduction in Recapture Tax Calculation)

    $104,078 * 39.6% = $41,215
    $195,922 * 23.8% = $46,629
    Total Tax = $87,844 (so a ~$23,106 or ~20.8% reduction in your KMP specific tax bill, better than a sharp stick in the eye!)

    You may have a problem though with an informed professional tax adviser because their first question will be "can we have a copy of every K-1 you ever received from KMP?" But you may want to try and get a verification of that concept from your CPA friend (or maybe someone who is actually focused on MLP investments) and then perhaps consider amending your 2014 tax return yourself. I am not sure how to do the entries correctly in TurboTax, which was another reason I caved in and hired a pro team after fully exiting some MLP positions and becoming concerned with how TurboTax handled them. You could also pay extra for TurboTax Audit Protection and then get on the phone with TurboTax to try and see if they could help (Alan Turing's job may have been easier than getting a straight answer from TurboTax though).

    After your Adjusted Basis hits zero, then you pay LTCG tax rates on the allocated income each year in your K-1 (this number is different than the gross amount of distributions received).

    Again let me caveat everything in my comment with the standard: I'm not a tax expert, that is just my rough understanding, don't ever believe anything you read on Seeking Alpha, always do your own due diligence, which will sometimes mean you have to pay someone for their professional expertise, never ever believe that Trinder guy unless he can post a link to some public filing or publicly available third party expert source supporting his statements.

    I don't have first hand experience with a zero adjusted basis position yet.

    Also for the rest of you who might be thinking to yourselves, "hmmm, interesting and that tax bill really sucks but I'll avoid that problem by only holding K-1 investments in my tax advantaged accounts." (IRA, Roth, etc., etc.) Guess what the first question was for me when I had my first meeting with my tax team?

    "Do you have any K-1 investments in any tax advantaged accounts?"

    That was the first question on their due diligence list. Why?

    The whole pesky Recapture issue when you exit a K-1 investment position in any tax advantaged accounts. In Uncle Pie's case if he held KMP in an IRA the $104,078 (or the $175,000) of Recapture generates UBTI because it is held in an IRA.

    Oops.

    Both of those numbers are way, way, way over the $1,000 threshold so all of a sudden $103,078 (or $174,000) will be viewed as taxable and the tax payment should correctly be sent out of your IRA to pay Uncle Sam. Your IRA custodian may mess that up though but the tax burden will still fall back on you if you get an IRS audit (and the IRS person understands MLPs correctly).

    UBTI Tax Rates: http://bit.ly/1rKwI4p

    I'm not sure if those UBTI tax rates are current but it will never matter to me because I will never hold any K-1 investment in my IRA. But OUCH! Although I guess the overall taxes likely end up being less than they would be in a taxable account.

    Some of you may now be thinking, "hmmm, well I'll never sell I'll just die first instead and I won't have that problem." Not exactly (other than you'll be dead when the problems show up), the day you die (and technically exit your ownership position in the partnership) that "step-up" that occurs will also trigger the same Recapture and UBTI issue if the K-1 investment is held in an IRA and your heirs correctly contact the MLP to reset their Adjusted Basis (even though it is held in an IRA). If the K-1 investment is held in a taxable account then the step-up in Adjusted Basis can occur and your heirs will sneak past the dreaded tax man.

    When in doubt: http://bit.ly/1J8ElOd

    It does seem like the IRS may not bother with small MLP investments in IRAs but it is a risk. Just always make sure you have a well thought out plan and make sure you try and think through various possible contingencies, like the old adage goes "Failing to Plan is Planning to Fail."

    Best Regards,
    Phil
    Apr 21, 2015. 09:01 PM | 3 Likes Like |Link to Comment
  • Rich Kinder: 'The Kinder Morgan Game Plan Is Still On Track' [View article]
    UP,

    If you look closely at how the calculation works for the line item called "Depreciation recapture-taxed at ordinary income rates," technically the ordinary income taxes are due based on "recapturing" the depreciation that was allocated over the life of the investment period as part of the reduction to get to Adjusted Basis (and yes the example is oversimplified). The maximum amount of depreciation that can be allocated is likely to end up being equal to the total Original Cost Basis, which in turn means that the maximum amount of Recapture subject to being taxed at Ordinary Income Tax rates may also end up being equal to the Original Cost Basis (which is why I asked if you originally paid $50 per unit for KMP). But again it is best to use professional help that has the necessary expertise in MLPs and I guess it all depends on how much brain damage you want to put yourself through thanks to the complexities of the tax code...

    Best Regards,
    Phil
    Apr 20, 2015. 11:17 PM | 1 Like Like |Link to Comment
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