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Ron Hiram

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  • Preliminary Look At Q2 2012 Distributable Cash Flow Generated By El Paso Pipeline Partners [View article]
    I have been holding EPB for years, and if performance warrants will continue to hold. I held BPL for an even longer period but voiced my concerns as performance deteriorated (see the BPL articles on my website http://bit.ly/L7tNRz) and gradually sold all my units.
    Aug 1 07:06 AM | Likes Like |Link to Comment
  • Update Regarding Energy Transfer Partners' Sunoco Acquisition [View article]
    I listened to the conference call discussing the ETP-SUN transaction. The range mentioned was $200-300m in terms of what management expected to receive. But as I noted in a prior article, the acquisition was not made conditional on completing a deal with Carlyle, so the disclosure on p16 is accurate. Still, I cannot discount your interpretation - it may be correct. At the end of the day, we are both long but wary.
    Jul 5 12:06 PM | Likes Like |Link to Comment
  • Update Regarding Energy Transfer Partners' Sunoco Acquisition [View article]
    $2.65b (50% of the $5.3b purchase price) will be in the form of ETP LP units to be issued. In order to produce a 7.50% per annum distribution yield for LPs, ETP must generate 14.4% (=$382m) of which 48% ($183m) will be paid to service ETE’s IDRs and 52% ($199m) will be paid to ETP’s LPs. As you can see, and as I previously noted, ETP has a high cost of capital.
    For its worth, the transactions between ETE and ETP will be, of course, accompanied by fairness opinions. I do not have sufficient information to form an opinion, so I don’t know whether ETP is being disadvantaged. But I think the “normal” GP-LP conflicts of interests are magnified when such large acquisitions take place, and more so when the acquiring entity at times is ETE (e.g., SUG) and at times is ETP (e.g., SUN). On top of that, the exceedingly complex structure adds to my discomfort as a unit holder.
    Jul 5 11:34 AM | Likes Like |Link to Comment
  • Update Regarding Energy Transfer Partners' Sunoco Acquisition [View article]
    SUN will contribute its interests in SXL in which it holds a 32.4% limited partnership interest, the 2% general partnership interest and 100% of its IDRs, to ETP. Then ETP will contribute these interests to a newly formed entity called ETP Holdco (see my response to Lufbery for additional details). So SXL ownership will be as follows: ETP Holdco will own the 2% general partnership interest and IDRs, as well as 32.4% of the LP units outstanding. The balance of the SXL LP units outstanding will continue to be held by the public. You are correct that on paper this should not change the performance of SXL. However, the structure following all these ETP and ETE transactions is exceedingly complex. Kelcy Warren has mentioned the need to “simplify the story”. The question is how fairly the various constituents will be treated if and when a simplification transaction is announced.
    Jul 4 03:01 PM | Likes Like |Link to Comment
  • Update Regarding Energy Transfer Partners' Sunoco Acquisition [View article]
    As indicated in Table 1, ETE has agreed to forgo distrbutions totalling $280m over a 4 year period. The analysis takes this into consideration.
    Jul 4 02:47 PM | Likes Like |Link to Comment
  • Update Regarding Energy Transfer Partners' Sunoco Acquisition [View article]
    I don't see a misjudgment. The article mentions this sale of units.
    Jul 4 02:45 PM | Likes Like |Link to Comment
  • Update Regarding Energy Transfer Partners' Sunoco Acquisition [View article]
    As I understand it based on ETP's June 18 and June 25 announcements, a new entity called ETP Holdco will be formed. It will be owned 60% by ETE and 40% by ETP, and be controlled by ETP (I assume for consolidation purposes). Both SUG and SUN will be dropped into ETP Holdco. Prior to the contribution of SUN to ETP Holdco, SUN will contribute its interests in SXL in which it holds a 32.4% limited partnership interest, the 2% general partnership interest and 100% of its IDRs, to ETP. ETP's 8-K of 6/25/12 explains what SUN shareholders will receive in return:
    "Under the terms of the merger agreement, Sunoco shareholders may elect to receive, for each Sunoco common share, either $50.00 in cash, 1.0490 ETP common units or a combination of $25.00 in cash and 0.5245 of an ETP common unit".
    So I don't yet see where my analysis is wrong (other than having reviewed the numbers again it comes to roughly 56 million ETP units).
    Jul 4 02:42 PM | Likes Like |Link to Comment
  • A Closer Look At Annaly Capital Management's Cash Flows [View article]
    I will be able to respond when/if I do a similar analysis for HTS and IVR.
    Jun 19 09:21 PM | Likes Like |Link to Comment
  • A Closer Look At Annaly Capital Management's Cash Flows [View article]
    MLPs invested within tax-exempt accounts generate potential
    unrelated business taxable income (UBTI). Should
    one place a MLP in an IRA and its allocated taxable net income
    exceeds $1,000, then it triggers an UBTI that would be
    subject to tax at the Federal level. Not sure about state level, but would not be surprised if this were the case at the state level too. You will need to check with an accountant or tax lawyer.
    Jun 19 02:37 PM | Likes Like |Link to Comment
  • A Closer Look At Annaly Capital Management's Cash Flows [View article]
    I agree the income statement includes unrealized gains and losses (e.g., from interest rate swaps). But my statement referred only to those assets classified as "available for sale" such as Agency mortgage backed securities. These constitute the bulk of NLY's assets. I believe my statement that unrealized gains and losses on these assets show up only on the balance sheet is correct.
    Jun 19 02:27 PM | Likes Like |Link to Comment
  • A Closer Look At Annaly Capital Management's Cash Flows [View article]
    I have not taken a look at the preferred. The first thing I would look at is liquidity in times of stress.
    Jun 18 10:57 PM | Likes Like |Link to Comment
  • A Closer Look At Annaly Capital Management's Cash Flows [View article]
    http://bit.ly/LhLCgl

    "It is true that when you own an MLP you are considered to be earning income in every state in which that MLP operates. However, in most cases unless you own a large position in the MLP it’s likely you will not have to file a return in every state or pay any state taxes outside your home state. There are two main reasons for this.

    First, many key states in which MLPs operate don’t have state income taxes at all. Examples include Texas and Wyoming, both xtates where MLPs are extremely active.

    Most others have minimum income limits; unless you have income from the MLP above that limit you’re not required to file state taxes.

    As most MLPs operate in multiple states, the share of income allocable to each individual State is quite small; typically only investors with large holdings will need to file. The exact amount of income allocable to each individual State is included in your K-1 form.

    The benefits of tax deferral coupled with high current income outweigh these complications. And many find it easier to simply consult a tax professional; any good accountant can easily handle MLPs."

    Hope this is responsive to your question.
    Jun 18 10:49 PM | 2 Likes Like |Link to Comment
  • A Closer Look At Boardwalk Pipeline Partners' Distributable Cash Flow As Of 1Q 2012 [View article]
    Not necessarily. BWP's distribution growth has been lower than many of the MLPs I follow. Lower growth may cause the distributions to be offset by unit price depreciation. See also A Closer Look At Trailing 12 Months Performance Of Selected MLPs.
    Jun 18 12:13 PM | Likes Like |Link to Comment
  • A Closer Look At Boardwalk Pipeline Partners' Distributable Cash Flow As Of 1Q 2012 [View article]
    I don't think so. Note how the net proceeds will be used:
    "Gulf South intends to use the net proceeds from the offering to repay all of its borrowings outstanding under its revolving credit facility. The remainder of the net proceeds will be advanced or distributed to affiliates of Gulf South to repay additional credit facility borrowings or used for general business purposes, which may include retirement of other long-term debt."
    So I think the issue of how capital expenditures will be funded still needs to be addressed.
    Jun 17 10:11 PM | Likes Like |Link to Comment
  • A Closer Look At Trailing 12 Months Performance Of Selected MLPs [View article]
    Price came down but so did that of many other MLPs. At its current multiple of sustainable cash flow other MLPs seem more attractive to me. That plus continuing concerns about BPL's leverage and performance.
    Jun 14 09:24 PM | Likes Like |Link to Comment
COMMENTS STATS
212 Comments
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