Seeking Alpha


Send Message
View as an RSS Feed
View arbtrdr's Comments BY TICKER:
Latest  |  Highest rated
  • Realty Income: Who Cares What Morgan Stanley Thinks? I'll Buy More On Pullbacks Anyway... [View article]
    If one reads the MS report they said NNN had slightly better opportunities for acquisitions based on tennant relationships. Nowhere did it say O was not a good company to buy. The key here is a matrix that MS and others follow. Very simply put, if you have an overweight you must then have an underweight.

    Their question is at the next earnings conference how will O do in both the $$ volume of acquisitions and dispositions, but the cap rate they get. Recent declines are of concern to all REITs. Valid questions and an UW rating that actually should be taken with little weight. Ratings need to be looked at BEYOND THE HEADLINE.
    Apr 21 11:58 AM | 2 Likes Like |Link to Comment
  • Kinder Morgan Energy Partners: Why Not Consider This Outstanding Wealth Building Machine? [View article]
    That one is easy. People wanted to sell KMP and buy KMR. What else move the prices of stocks?

    KMI or KMR belong in an IRA as no possible UBTI recapture. KMP does not, especially when you have an alternative investment sitting there selling at a discount! The IRS is collecting recapture of UBTI on depreciation and passive losses for large non-profits today. Will that move to individuals? No idea but the possibility is always there.
    Apr 19 10:47 AM | Likes Like |Link to Comment
  • Kinder Morgan Energy Partners: Why Not Consider This Outstanding Wealth Building Machine? [View article]
    Using the 5 year chart for APL tells a big lie. It almost went BK because of mismanaged hedges a bit over 5 years ago. Then it sold off a bunch of assets and righted the company. Does that make APL - with little growth in DCF in the last year - a better investment today? Hardly.

    The key is all in the timing of when one gets in. I would argue the authors portfolio is a bit risky. SDRL is a good company but the 10% yield certainly is an indicator that most think it is risk\y otherwise its yield would be lower. Same for KMP vs. EPD. There certainly is a reason KMP pays 7% and EPD about 4%. If EPD was not a more secure stable company going forward investors would either sell EPD or there would be more demand for KMR.

    Pretty simple that higher yield implies higher risk.
    Apr 19 10:42 AM | Likes Like |Link to Comment
  • Boardwalk Pipeline Partners: Is There Anything To Be Salvaged From This Fiasco? [View article]
    Adam - The comments regarding bluegrass are not correct. Both BWP/WPZ and KMP/MWE have proposed projects for a NGL pipeline. Neither project has gotten producers to allot more than about 10% of capacity. Thus neither project is moving forward right now. One or the other will eventually be built.

    Pipelines inherently have one big problem - they are not flexible as to destination. They also while able to move large quantities of product very cheaply; are very expensive to build. Thus lately producers have been moving back and several pipes have been cancelled by companies including EEP, OKS, KMP, and SXL.

    Last a question about LNG. If prices of NG are $6 - then it will cost approximately $11.50-$11.75 to land USA/Canada LNG in Europe. That is MORE than what gas costs in parts of Europe today as the EU import price today is about $11. Going to be interesting with the need for meeting EPA regulations on coal and a lack of infrastucture to deliver NGas in the US how things will work out. Bottom line is much over $6 gas and other producers (Middle East & Australia) can and will deliver for less than the US.
    Apr 18 04:02 PM | Likes Like |Link to Comment
  • Kinder Morgan Energy Partners: Do Not, Ever, Underestimate The Distribution Yield [View article]
    Peter - Fractional shares are not an issue as the broker simply adds $$ paid and units/shares to get an average price paid. As to UBTI. The IRS is already collecting UBTI on the sale inside an IRA for recapture of depreciation for major non-profits. IMHO it is only a matter of time before they go after others. UBTI on a sale could be a time bomb for the future.
    Apr 17 10:28 AM | Likes Like |Link to Comment
  • Kinder Morgan Energy Partners: Do Not, Ever, Underestimate The Distribution Yield [View article]
    David - If your KMP is not inside an IRA you should have been paying taxes long ago! You are not allowed to have a negative tax basis. Need to shoot your tax person (or yourself).
    Apr 17 10:24 AM | Likes Like |Link to Comment
  • Kinder Morgan Energy Partners: Do Not, Ever, Underestimate The Distribution Yield [View article]
    Sure would be good if the article discussed at least the notion of a K-1 and the ramifications come tax time of that. Also that much of that "yield" is created by depreciation much of which is recaptured on sale at ORDINARY INCOME rates in addition to any capital gain on the transaction when dealing in KMP. KMR is a hybred and avoids much of this. The GP parent is a C corp that has itrs own issues involving taxation coming up in a couple years.
    Apr 15 09:34 AM | 1 Like Like |Link to Comment
  • Linn Energy: Don't Panic About The Distribution [View article]
    Albert -Your discussion was going well until you actually correlated a drop in LINE with a comment by Cramer instead of a renewed bunch of publicity by Barrons, Hedgeye and issues regarding ther Barry acquisition. The idea that Cramer could have a longer term effect is funny. The cloud put forth by the SEC and Barrons was not. Would you say concerns over and the higher price offered to Barry and concerns about that merger contributed as well? Cramer . . . . seriously?
    Apr 14 08:45 AM | 4 Likes Like |Link to Comment
  • A Quantitative Look At IDRs And Their Impact On MLP Growth [View article]
    Rules are a bit like the 30 day wash rule but with MLPs you need to not own for at least one record date which is usually the first or last day of each month. Buy back rules for MLPs are different and you are correct that the allocation of earnings items happens again usually 12 times a year. Thus you could own a MLP when a significant asset is sold and be allocated a large capital gain even though you only own it for a couple days.

    There was a long investigation by Factoids who writes for SA on comparing MLPs with and w/o IDRs and he found little difference using a larger universe and putting into consideration the actual activity of the MLPs. Very hard to compare MLPs with terminalling with one that transports oil in pipeline. The profitability of sectors varies and moves around quite a lot.
    Apr 13 05:37 PM | 1 Like Like |Link to Comment
  • A Quantitative Look At IDRs And Their Impact On MLP Growth [View article]
    Mel -

    Your comments suggest a couple of things. First is that you definately needed to read up on what a MLP is BEFORE you bought into them. Second and more important - you still do not understand how a MLP works on sale and maybe yuor CPAs take is a bit fuzzy as well. Going to National association of Publically traded Partnerships and reading their primer called MLPs 101 will give you a better picture. On a sale part of the difference between your capital account basis and purchase pirce will be taxed as ORDINARY INCOME. Your CPA has also given you some really bad information as selling out any buying back the same day will not result in zeroing out your capital account since allocations and calculations are usually done monthly by MLPs. Either wait longer - even doing so 3 months later makes for a confusing K-1 - or do so in an account with a spouses SS# to alow for easier accounting.

    Last, I often have positive items allocated to me by partnerships - things like dividend income, capital gains, and yes income are all taxable each year from companies like MMP, PAA, MWE, EPD and others.
    Apr 13 10:13 AM | 1 Like Like |Link to Comment
  • Is Kinder Morgan Too Large To Restructure? [View article]
    MMP, PAA, MWE to name three more.
    Apr 12 09:46 PM | Likes Like |Link to Comment
  • 6 Basic MLP Lessons From The Q1-14 Data [View article]
    Factoids- Great article. Always agree with your numbers.

    The only significant place where we differ in investing strategy is in using the broker estimates when they are flat or declining for the current year but there is a significant event or really no information out further into the future.

    MWE is the best example of that one. It has a lower yield of a higher growth MLP growing at the same .01 a quarter as EPD, but w/o the earning stability and high coverage ratio. The reason for their struggle is a growth rate for organic projects currently well north of 20% and probably closer to 30% a year. The drag of both projects in construction and the 12- to 18 months that is takes to get volumes to ramp up (in MWEs case the agreements alow a ramp up before the take or pay clause kicks in) create a drag that does not go away. Eaxch year it seems MWE shows a declining budget for growth only to create more growth by adding projects in the first quarter or two. With broker projections and modeling really only set up for 12 month numbers (anything longer is sort of a run off) MWE has been hurt by pushing back DCF unit growth twice.

    There are other MLPs with poor coverage but growing and improving their coverage rations that have turned things around in the last year or so. Investing in those - NS as you mentioned, ETP, ETE and others has rewarded the patient investor.

    Last, there are MLPs with poor coverage rations, but improving outlooks in say 2016 or 2017 or MLPs that are TODAY covering their distributions and have a liklihood of moving up in price either because they are so undervalued or their fundamentals are improving. Examples of these include BWP, EPB, EEP, and RNO.

    Apr 2 03:22 PM | 4 Likes Like |Link to Comment
  • Realty Income: Buy The Dip? [View article]
    tm - Since O does not buy properties with mortgages the only thing they are trying to pay off is the bank credit line. got to keep that one free so that when opportunity comes they can add more properties.

    A REIT is a very simple business - borrow money at one rate and buy properties that pay a higher rate. The spread is called a dividend. REITs must pay out 90% of the profit so always a need to borrow/issue more shares to expand.

    As to brick and mortar dying - not hardly. One of the big adbvantages of online with no sales tax is going away. Lots of thnigs do not lend themselves to online buying and others are thing one needs now not in a week.
    Mar 27 12:04 PM | 1 Like Like |Link to Comment
  • Realty Income: Buy The Dip? [View article]
    The lease increases are sort of based on the increase in the CPI or a similar index. They are not based on interest rates. Obviously an increase in interest rates would hurt any company needing to borrow or refi money.
    Mar 27 11:59 AM | 1 Like Like |Link to Comment
  • Young Incomers Portfolio: Q1 2014 Update [View article]
    you indicate you are looking for safety in your investments but are investing in Kinder which has a payout coverage of almost exactly 1.0X when there are others in the MLP/pipeline arena with similar yields and much better coverage ratios.

    Also and confused when you indicate you are invested in 6-8% A rated notes. what sort of duration do you have. Won't an increase in interest rates give you a significant loss in the underlying note? A 20 year bond if interest rates go up by 1% would fall 15%. That would be an unpleasant hit.
    Mar 26 07:26 PM | Likes Like |Link to Comment