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Ron Hiram

 
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  • A Closer Look At Boardwalk Pipeline Partners' Distributable Cash Flow As Of Q3 2012 [View article]
    I don't know of such a way. The only thing I can suggest is to look across a large number of MLPs and see what they mean and median numbers of maintenance capital expenditures as a percent of revenues. Then look more closely at those that deviate significantly.
    Dec 22 09:03 PM | Likes Like |Link to Comment
  • Can Annaly Capital Management's Reduced Dividend Be Sustained? [View article]
    I don't regard the investment advisory business to be a core business and therefore exclude it. Tax reduces the amounts available to pay dividends. Having said that, you can certainly make the adjustments you suggest if my approach strikes you as too conservative.
    Dec 22 08:33 PM | Likes Like |Link to Comment
  • Can Annaly Capital Management's Reduced Dividend Be Sustained? [View article]
    I agree that the deterioration was caused by the Fed's policies rather than poor management. And, as you point out, these may continue for quite a while. The key question in my mind is not dividend reinvestment but whether to substantially increase the position, substantially decrease it, or just maintain the current level. For now, I have opted for the latter. hold. Sounds to me like you have made the same decision.
    Dec 22 08:24 PM | Likes Like |Link to Comment
  • A Closer Look At Boardwalk Pipeline Partners' Distributable Cash Flow As Of Q3 2012 [View article]
    I assume you meant BPL, not BLP. I have not published my research on KMI, QRE and VNR, but have done so for Buckeye Partners. I prefer not to reinvest distributions.
    Dec 20 01:22 PM | Likes Like |Link to Comment
  • A Closer Look At Boardwalk Pipeline Partners' Distributable Cash Flow As Of Q3 2012 [View article]
    Retail investors form a large part of the MLP investor base.I argue in my articles that it is quite difficult to determine whether an MLP's distributions constitute a return on the investment or are sourced via issuance of debt and/or equity. Many investors do not make the distinction and hold the MLP for its current yield and expect future increases in distributions and unit prices. Therefore an announcement by an MLP that distributions are being cut or no longer growing frequently triggers a sell-off. BPL and NRGY are cases in point. Lenders frequently limit an MLP's borrowing capacity, so when LT debt to EBITDA exceeds ~5:1 (e.g., BPL currently and NRGY prior to selling its retail propane business) propping up distributions by raising additional debt becomes problematic for an MLP.
    Your last two questions deal with stocks, not MLP units. My response is that all else is never equal. But if you found a situation where all things were equal, and if current tax regulations remain unchanged, I would rather receive $1 of dividends than $1 of short or long-term capital appreciation. So I would pay more.
    Dec 20 01:15 PM | Likes Like |Link to Comment
  • A Closer Look At Regency Energy Partners' Distributable Cash Flow As Of Q3 2012 [View article]
    Not necessarily. ETE is the GP of both and would likely have the most influence on the transaction price. Investment bankers will be retained by ETP and RGP to provide a "fairness opinion" to each side of this non-arms length transaction. If there is a premium, I doubt it will be much. Also, rather than ETP acquiring RGP, you may see a 3-way merger between ETE, ETP and RGP accompanied by elimination of the GP IDRs. This seems to me a more likely path. The premium is likely to be paid to ETE unitholders.
    Dec 15 03:16 PM | Likes Like |Link to Comment
  • A Closer Look At Boardwalk Pipeline Partners' Distributable Cash Flow As Of Q3 2012 [View article]
    If they cut the distribution to a more sustainable level the price would drop sharply. That could change my level of comfort and the recommendation. I do not view favorably issuing debt or equity to fund distributions (whether you define them as "additional" distributions or not). It is not sustainable. I generally avoid MLPs that repeatedly do that.
    Dec 6 09:11 AM | Likes Like |Link to Comment
  • A Closer Look At Suburban Propane Partners' FY 2012 Distributable Cash Flow [View article]
    I have been adding to my EPD position on dips and would also feel comfortable with MMP and PAA.
    I view WPZ is riskier but with greater capital appreciation upside. Have also been adding WPZ on dips - but seems like every time I do that it falls further. Still, I think it is attractive from a risk-reward standpoint.
    SPH is my most speculative MLP position.
    Dec 4 10:41 AM | Likes Like |Link to Comment
  • A Closer Look At Regency Energy Partners' Distributable Cash Flow As Of Q3 2012 [View article]
    MLPs invested within tax-exempt accounts could potentially generate unrelated business taxable income (UBTI). Should one place a MLP in an IRA and its allocated taxable net income exceeds $1,000, then it may trigger 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 should check with an accountant or tax lawyer.
    Nov 30 04:19 PM | Likes Like |Link to Comment
  • A Closer Look At Enterprise Products Partners' Distributable Cash Flow As Of Q3 [View article]
    I will shortly summarize key parameters for the MLPs I follow along the lines you suggest (I did that ~3 months ago once I completed my analysis of all the 10-Q). I don't think price-to-book is not a key metric for MLPs.
    Nov 30 06:55 AM | Likes Like |Link to Comment
  • A Closer Look At Energy Transfer Partners' Distributable Cash Flow As Of Q3 2012 [View article]
    "In reconciling net income to net cash provided by operating activities you need to subtract the income from equity investees and add back the cash that was actually received from the equity investee." - this indeed is what I do
    Nov 13 09:32 PM | Likes Like |Link to Comment
  • A Closer Look At Energy Transfer Partners' Distributable Cash Flow As Of Q3 2012 [View article]
    ETE is GP of both ETP and RGP.
    RGP owns 30% of Lonestar (ETP owns 70%).
    ETP sells natural gas and NGLs to RGP. It also provides transportation services and compression equipment to RGP and receives certain contract compression services from RGP.
    ETE pays ETP to provide various general and administrative services on its behalf to RGP.
    Nov 13 08:23 AM | Likes Like |Link to Comment
  • A Closer Look At Williams Partners' Distributable Cash Flow As Of Q3 2012 [View article]
    An increase in NKG prices should improve results in the short term. Longer term (2014), I think improved results will be driven by WPZ's Marcellus shale infrastructure and the Geismar acquisition. I hope the wave of unitholder dlution is over.
    Nov 11 08:22 AM | Likes Like |Link to Comment
  • A Closer Look At Magellan Midstream Partners' Distributable Cash Flow As Of 3Q 2012 [View article]
    I assume you are refering to possible tax reform proposals that would deny MLPs their tax-advantaged (pass-through) structure. Current legislation (Revenue Act of 1987) requiresd MLPs to
    receive 90% of their income from qualified sources. Qualifying sources include natural resource activities such as exploration, development, production, mining, efining, and transportation (including pipelines) of oil, natural gas, minerals, geothermal energy, and/or timber. Given that these incentives have worked well for many years and that additional investments are required to increase domestic oil and gas production and reduce U.S. dependence on oil imports, I doubt that there will be a repeal of the legislation granting MLPs their special status. Of course, if I am wrong, I will suffer significant declines in the value of my MLPs.
    Nov 8 07:44 PM | 2 Likes Like |Link to Comment
  • A Closer Look At Magellan Midstream Partners' Distributable Cash Flow As Of 3Q 2012 [View article]
    Question 1: the physical life of a pipeline is considered virtually unlimited given proper maintenance, repair & replacement programs (see http://bit.ly/VWbRdJ).
    I haven't seen any studies that indicate maintenance cap ex per pipeline mile must rise substantially over time.
    Question 2: I cannot answer because I don't know what backs up the assertion that MLPs are undervalued on a risk adjusted basis relative to utilities, high yield bonds and telecom stocks.
    Nov 8 07:28 PM | Likes Like |Link to Comment
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