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I seek to liberate investors from the chains of borrowed opinions by teaching metric awareness that leads to the formation of your own opinions. I lack the usual attributes that qualifies me to write on investing. I am a retail investor. But I do gather, process and analyze significantly more... More
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  • MLP General Partner Stat Update 2-14-14 8 comments
    Feb 15, 2014 6:57 PM

    Why do General Partner MLPs sell at such lower yields than regular MLPs? It is there dividend and distribution growth. That spreadsheet is included in this update.

    Friday night (23 hours ago as of this writing), I submitted an article to Seeking Alpha with the title "How much dividend income growth do you need?" While I lack the ego to say that any of my articles are "must reads" - there is data in many of my articles that I do consider "must knows". That upcoming article has a few "must know" data points. If you have the impression that you do not need as much distribution growth as these GPs provide, then give that article a slow read - and see if you do not suddenly have an increased interest in this MLP sub-sector.

    I am doing something that might be a first at Seeking Alpha in that article. I am going to post a reader poll in the comment section - and let readers know in the text of the article that such a poll is upcoming. I hope I can count on the participation of many of you. First - I will poll to see how many of you have already taken the extra effort to know their "portfolio CAGR" - how many do not - and how many plan to spend capital in retirement, so the question does not really apply to them. Second - I have provided sample portfolios that sum to $100,000. I will poll to see if there is a need (from some of the math impaired readers - and that could be a very large minority) for examples of the same portfolios that sum to $250,000 or $750,000. If there are more than 40 "likes" to those two questions, then I will create those "ten year" spreadsheets and post them to my Seeking Alpha InstaBlog. These spreadsheet take time to create - but if you vote, they will come. Please do not post a written reply to the poll questions. You should reply to the poll questions with a click on the "like" button.

    It is my hope that "polling" generates participation and "catches on". There is a lot of stuff that we can only learn by knowing what our fellow investors do and think. Some of my articles have generated more than 10,000 page views. I only anticipate the participation of about 8%. But that implies poll participation of about 800. That is a sample size large enough to be meaningful. On the other hand, the kind of investor who would read a Factoids' article to the end may be a bit atypical.

    Publicly Traded GP's for MLPs 02-14-14



     12-31-13CurrentDistrib/Q1 DistDist/dcfDist/dcfYear-to-Date Percent Change
     PricePriceQuarterYield20142015PricePr+DistEPSTargetDCFDist*cagr

    ATLS46.8547.530.46003.8775.4153.961.451.455.050.000.0053.330.00
    AHGP58.6360.890.82755.4494.5788.273.853.8512.530.000.0011.820.00
    ETE81.7486.280.69253.2186.5675.895.555.55-6.340.000.009.060.00
    KMI36.0033.780.41004.8587.2382.00-6.17-6.17-5.52-0.690.0010.810.00
    NSH28.0931.390.54506.9499.0991.2111.7511.757.143.540.000.000.00
    OKE62.1859.960.40002.6766.6760.15-3.57-3.57-12.63-2.540.0011.110.00
    TRGP88.1796.520.60752.5277.8865.689.479.4719.153.45-0.9532.790.00
    WGP39.5141.300.23142.2482.6361.694.534.53-1.030.190.0040.210.00
    WMB38.5740.830.40253.9468.5160.985.865.860.000.000.0018.800.00
    XTXI36.1639.410.15001.5268.1864.528.999.4035.291.280.0025.000.00

    The GP Average 3.7280.6770.434.174.215.360.52-0.1021.29 

    Dividend dates used were:

    ATLS : 02-19AHGP : 02-19ETE : 02-19KMI : 02-18NSH : 02-18OKE : 02-18TRGP : 02-18WGP : 02-21WMB : 03-31XTXI : 02-14

    Historical GP Month-End Yields:

    Jan 07: 3.92%Feb: 3.72%Mar: 3.58%April: 3.32%May: 3.16%June: 2.88%
    July 07: 2.89%Aug: 3.42%Sept: 3.52%Oct : 3.84%Nov: 4.06%Dec: 4.06%
    Jan 08: 4.34%Feb: 4.58%Mar: 4.97%April: 4.66%May: 5.00%June: 5.22%
    July 08: 5.91%Aug: 6.04%Sept: 7.67%Oct : 9.67%Nov: 17.21%Dec: 20.95%
    Jan 09: 21.61%Feb: 11.54%Mar: 11.84%April: 11.05%May: 5.80%June: 5.92%
    July 09: 5.32%Aug: 5.61%Sept: 5.49%Oct : 5.24%Nov: 4.94%Dec: 4.55%
    Jan 10: 4.47%Feb: 4.34%Mar: 4.11%April: 4.08%May: 4.43%June: 4.33%
    July 10: 3.75%Aug: 4.40%Sept: 3.91%Oct : 3.76%Nov: 3.66%Dec: 3.59%
    Jan 11: 4.13%Feb: 3.85%Mar: 3.93%April: 3.98%May: 4.15%June: 4.06%
    July 11: 4.13%Aug: 4.55%Sept: 4.85%Oct : 4.39%Nov: 4.59%Dec: 4.22%
    Jan 12: 4.22%Feb: 4.05%Mar: 4.05%April: 4.03%May: 4.45%June: 4.47%
    July 12: 4.24%Aug: 4.22%Sept: 4.16%Oct : 4.25%Nov: 4.56%Dec: 4.47%
    Jan 13:Feb:Mar:April:May:June: 4.12%
    July 13: 3.95%Aug: 4.30%Sept: 4.31%Oct : 4.21%Nov: 4.07%Dec: 3.75%

    Distribution History


     Distribution / Unit / Quarter% Distrib Growth / Year
    Co.Q2-11Q3-11Q4-11Q1-12Q2-12Q3-12Q4-12Q1-13Q2-13Q3-13Q4-13Q1-14Q1-11Q1-12Q1-13Q1-14

    ATLS0.11000.22000.24000.24000.25000.25000.27000.30000.31000.44000.46000.4600na242.8625.0053.33
    AHGP0.55000.58250.61000.63750.66750.69750.72000.74000.76200.78500.80750.827516.6920.7416.0811.82
    ETE0.56000.62500.62500.62500.62500.62500.62500.63500.64500.65500.67250.69250.0015.741.609.06
    KMI0.30000.30000.30000.31000.32000.35000.36000.37000.38000.40000.41000.4100nana19.3510.81
    NSH0.48000.49500.49500.51000.51000.51000.54500.54500.54500.54500.54500.545010.346.256.860.00
    OKE0.26000.28000.28000.30500.30500.33000.33000.36000.36000.38000.38000.400018.1817.3118.0311.11
    TRGP0.27250.29000.30750.33620.36500.39750.42250.45750.49500.53250.57000.6075na30.5836.0632.79
    WGP0.00000.00000.00000.00000.00000.00000.16500.16500.17870.19750.21370.2314nanana40.21
    WMB0.20000.20000.25000.25900.30000.31250.32500.33880.35250.36630.38000.4025na29.5030.8118.80
    XTXI0.09000.10000.10000.11000.12000.12000.12000.12000.12000.12000.12000.1500na22.229.0925.00
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Comments (8)
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  • MisterJ
    , contributor
    Comments (585) | Send Message
     
    Do I understand correctly that ATLS would be most attractive from a future CAGR perspective? They seem to have best distribution/discount cash flow ratio. Thanks!
    17 Feb, 12:06 AM Reply Like
  • Factoids
    , contributor
    Comments (358) | Send Message
     
    Author’s reply » Mister3 - you have made a number of mistakes in the understanding of the data that you have shown with that question. Don't worry - I am use to it. Until one acclimates to my data presentation - mistakes will be made.
    (1) DCF is not "discounted cash flow" - which is a valuation system that gives a present value to the sum of future income flows. DCF is distributable cash flow - which is an earnings metric, like EPS is an earnings metric.
    (2) I did not show a forward CAGR projection in this data. I did show historical distribution growth - but nothing forward looking. I did show the Dist/DCF ratio - which is one "omen" for generating a CAGR projection.
    (3) If I had shown some raw CAGR inputs - some of those inputs would have projected ATLS as the highest CAGR projection GP. Some would not.
    (4) I actually assess WMB as having a higher CAGR than ATLS. But WMB does not have a long track record. I currently look at distribution growth for the GPs this way - if MLP WES is projected to be growing its distribution faster than APL -- then WMB should have a higher CAGR than ATLS.
    17 Feb, 09:46 AM Reply Like
  • MisterJ
    , contributor
    Comments (585) | Send Message
     
    Thanks for your blunt correction. Are you from Germany too? - Reminds me how people bluntly call out one's mistakes there without any hint of sugar-coating. What I would like to call out is that investing has a very large luck component and a rather small skill component. Mean-reversion is very strong in investor and also company performance. While we can put some aspects to our advantage by exploiting value, momentum and other edges we have to realize that to a large part luck will decide at least short-term outcome. In your case - whether WMB or ATLS will have better CAGR in the next 20 years (my retirement timeframe) cannot be foreseen.
    17 Feb, 12:44 PM Reply Like
  • MisterJ
    , contributor
    Comments (585) | Send Message
     
    Sorry - I wanted to thank you for your great efforts at helping us. I do appreciate it a lot and have learned some important details about MLPs and BDCs.
    17 Feb, 01:10 PM Reply Like
  • Factoids
    , contributor
    Comments (358) | Send Message
     
    Author’s reply » I have been overwhelmed with feedback - and a lot of it negative feedback - due to a recent article. I have needed to reply quickly and tersely to handle the workload. I did not desire to be overly blunt. In hindsight - I see that I was.
    17 Feb, 01:15 PM Reply Like
  • MisterJ
    , contributor
    Comments (585) | Send Message
     
    Thanks anyways. In German language there's a saying: Who criticizes you is your teacher, who lauds you may be your enemy. You're an excellent teacher. ;-)
    17 Feb, 01:38 PM Reply Like
  • Factoids
    , contributor
    Comments (358) | Send Message
     
    Author’s reply » I also made en error in my reply. WGP is the GP for WES - and not WMB. WMB is the GP for WPZ - and WMB has an average (for a GP) dividend growth projection of around 18%.
    17 Feb, 02:00 PM Reply Like
  • cymbalta
    , contributor
    Comments (175) | Send Message
     
    Thank you for your continued lessons in due diligence. I am part of your readership that finds your data difficult to digest but that is not YOUR problem. Please keep writing. I have a lot of time to analyze and understand what you are attempting to "teach" me.
    As MisterJ wrote, "You're and excellent teacher. ;-)"
    19 Feb, 11:05 AM Reply Like
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