Enterprise Products Partners (EPD) is king of MLPs, and as the largest MLP raises cash and...

Enterprise Products Partners (EPD) is king of MLPs, and as the largest MLP raises cash and dilutes, Jon Ogg warns the other large MLPs and second-tier MLPs likely will follow suit, which could mean profit taking and possible near-term short selling are likely to come back as a temporary theme in the MLP sector. EPD, +11.8% YTD, -2.8% AH.

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Comments (6)
  • Hendershott
    , contributor
    Comments (1831) | Send Message
    They're all going to raise money to build more pipelines. CBI, PWR, PRIM, MTRX, MTZ...pipes and tanks.
    4 Feb 2013, 07:11 PM Reply Like
  • davidingeorgia
    , contributor
    Comments (2661) | Send Message
    This Ogg guy does know that these companies - the good ones anyway - typically use the proceeds to expand and acquire and grow their revenue streams? Which are *good* things long term for shareholders? If not, would someone please tap him on the shoulder and tell him.
    4 Feb 2013, 07:38 PM Reply Like
  • elliot_mllr
    , contributor
    Comments (1952) | Send Message
    Since MLPs typically distribute a large portion of their distributable cash flow, they constantly raise funds in the debt and equity markets (they usually fund growth capex by equal parts of debt and equity, and they normally will do equity raises to pay down revolvers used to make acquisitions). Virtually every MLP does this virtually every year. I don;'t know Mr. Ogg, but I am surprised that he doesn't know that this is a very normal routine for MLPs.
    Elliot Miller
    4 Feb 2013, 08:43 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2865) | Send Message
    I agree, MLPs do these raises all the time. Its not a risk, its a cost of doing business. Other MLPs will not likely offer additional units this year, they WILL offer units. I don't consider it dilution if the distributions don't fall.
    4 Feb 2013, 10:30 PM Reply Like
  • elliot_mllr
    , contributor
    Comments (1952) | Send Message
    Mr. Maher:
    You are correct. It is certainly not dilutive if the funds raised are used in a manner accretive to distributable cash flow, which is generally the case (especially with a well run company such as EPD).
    Elliot Miller
    5 Feb 2013, 10:47 AM Reply Like
  • SaltyDog62
    , contributor
    Comments (838) | Send Message
    And I will be there to buy the dips...
    7 Feb 2013, 07:36 AM Reply Like
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