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arbtrdr

arbtrdr
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  • 5 Stocks With Payout Ratios Over 100 Percent [View article]
    Ben-

    You obviously do not have a clue regarding MLPs. They pay out distributable cash flow. MLPs have huge non cash accounting items such as depreciation that are not real expenses. A pipeine can and does last loger than the depreciation life. Paying out more than earnings does not create a wasting asset. Your analysis is simply wrong and misleading. Unfortunate that such drivel can be posted to mislead people about MLPs. Try learning what the term DISTRIBUTABLE CASH FLOW means. OK? You might also look at REITs. They use AFFO to set their distributions. Similar situation where buildings are depreciated but are almost always worth more in the future despite depreciation.
    Aug 30 06:23 PM | 6 Likes Like |Link to Comment
  • Enterprise Products Partners Is All Set To Grow [View article]
    Am very confused by your comment that EPD - "has a substantial acreage in the shale plays". You sort of make it sound like EPD is drilling wells, but intead is a gather and processor in those fields with production dedicated to EPD for defined terms.

    Also a bit strange to suggest it is going to grow in a signifant manner. Yes, $5B is huge but EPD has an enterprise value of approximately $80B. Thus $5B is only a 6% increase.

    The other comments about increasing export of propane, great long term financing and the insets on its assets are right on. More infrastucture is needed and 2014 will put in place more assets than in 2013 with even more projected for 2015. Opportunity abounds, but EPD continues to do it in a reasoned controlled manner.

    Last, potential investors need to remember there are significantly different tax ramifications when you own a MLP. Reading a bit on MLPs at the National Association of Publically Traded Partnerships and their MLP 101 primer should be required before investing as K-1s are not for everyone.
    Mar 13 05:36 PM | 5 Likes Like |Link to Comment
  • Disaster Strikes For Boardwalk Pipeline Partners [View article]
    Scary headline and a bunch of wrong info.

    DCF is down about 15%. Hardly a "disaster".

    Loews offered a loan. BWP at this point said they did not need it.

    BWP said they were not putting any $$ from storage contracts into estimates for 2014 because gas is lower on future contracts. Speaking privately they acknowledge there will be storage income. BWP normally stores gas on as needed basis for heating season and to stabilize deliveries.

    BWP also said they will have significant income from new projects in second 1/2 of 2014 but did not want to factor in those $$ until they go into service.

    BWP expects to pay off some $250M in debt and get to a 4X EBITDA coverage. That is better than a lot of MLPs out there including MWE and ETP to name just two.

    Agree with Raj - not all that bad except for your article.
    Feb 10 01:34 PM | 5 Likes Like |Link to Comment
  • Simple Rules For MLP Investing [View article]
    Great analysis. Two thoughts that are relevant. There are a significant number of long time MLP investors who do not invest for yield but instead growth. I started in MLPs in 1994 and got into MLPs in a big way in 2000 when the tech boom did not feel good. MLPs for me are about growth. I also put $$ into MLPs in a very over allocated manner and as such own some MLPs that act as a portion of my bond portfolio. If you can get a large enough yield and a relatively stable MLP one can be quite happy with a flat distribution in this case.

    Your comment about bad BDCs only making money for those that run them is certainly correct.

    The only place where I would look at MLPs a bit differently is getting into the MLP in depth. We have had a number of times when correctable bad news or an institutional seller dumping into the market can provide a market opportunity to buy a MLP that would not normally fit ones buying parameters. An example would be the change in assets for ETP. Late in 2012 it would bounce of $41 repeatedly apparently because of the yield. Those that looked deeply into what they were doing saw not a flat distribution, but rather one that was going to move up in the future.

    Thanks for a great article. ARB
    Jan 20 04:04 PM | 5 Likes Like |Link to Comment
  • Kinder Morgan Energy Partners: The Only Pipeline Company You'll Ever Need? [View article]
    KMP is certainly a MLP that should be in every portfolio but is predicting to grow its distribution in 2014 by only .01 per quarter or .10 in total! Hardly a stellar performance. The headline is sort of silly as one should never buy only one of anything in investments. As to profits. The DCF is indeed up by 26%, but the author forgets that the unit count is up by almost the same amount.

    KMP is now slowing in its distribution growth and has no cushion of excess DCF coverage (only $22M last quarter out of $2.2B!) to assist in future distribution increases. Yes it has a great historical track record, but the law of large numbers is beginning to haunt KMP.

    Last, any article on MLPs should tell potential investors to read a little bit on the tax ramifications of owning and selling a MLPs. Go to NAPTP.org and read their MLP 101 primer. Dealing with K-1s is not for everyone.

    FWIW - I own KMI and KMR.
    Jan 16 08:28 AM | 5 Likes Like |Link to Comment
  • Viewing Kinder Morgan's Valuation Through A Discounted Cash Flow Model [View article]
    Have not followed your analysis in detail before. I come to the same valuation number within a couple of $$, but wonder with a MLP and all the differences between MLPs and other corporations how you can effectively use EPS as part of the calculation.

    I also have concerns when any article that includes MLPs does not at least mention that they pay NO dividends and never have. A distribution is very different both when filing yearly taxes and with the recapture on the sale. Should that not be at least a side note provided by you?
    Nov 22 09:18 AM | 5 Likes Like |Link to Comment
  • Linn Energy: A Different Kind Of Oil And Gas Company? [View article]
    Richard - I compliment you on your article. I agree the PV 10 valuation is subject to discussion but you disclosed that. The only bone to pick is you comment that LINE would need to have a drilling budget of about $700M which is NOT significantly above the $560M that are scheduled to spend in 2013. That number is also greater than the prior year.

    As for my interest is this. I bought a position in LINE at about $20 some years ago. My LINE holdings are less than 1% of my MLP holdings and less than 0.003% of my portfolio. It is going to be interesting but darned if I can find anything in LINE financials that the SEC if going to have trouble with as being illegal. The LINE method of hedging was confusing (so is the MLP structure to most) and hopefully their change will support more clarity.

    ARB
    Jul 6 12:44 PM | 5 Likes Like |Link to Comment
  • Investors' Primer For Kinder Morgan [View article]
    A really well thought out article. It should be required reading BEFORE one purchases a MLP. Many investors buy and then are surprised and befuddled when they get a K-1 instead of a 1099DIV to report the prior year's activity. If that was a surprise, then upon selling there is total shock that they not only need to pay capital gains taxes if the unit price has gone up but recapture than can be huge. Someone selling partial holdings of MLPs can owe taxes that are more than their gain from the increase in unit price. Add the primer called MLP 101 at the NAPTP.ORG website (National Association of Publicly traded Partnerships) and investors should be able to make intelligent choices.
    Apr 22 06:09 PM | 5 Likes Like |Link to Comment
  • MLPs - A Reality Check ? [View article]
    Ken - Thanks for your comment. I can share two points of comment on your article.

    The collection of UBTI of recapture on sale in an IRA is indeed covered in the statues. The problem is other than some large non-profits the IRS has never attempted to collect this and if they did it with a ROTH to the general public there would be a huge outcry. What I did with my several small positions in my IRAs is to simply every year or two trade them for another similar IRA or buy in my Roth and sell in my traditional IRA. We agree that there certainly is the potential if the information reported to the IRA on K-1s is changed for them to become aggressive here.

    I unfortunately recently lost my mother. The good part was that she was on almost every MLP held outside my IRAs as a joint owner. I informed the broker and the MLPs of her passing and recently received K-1s showing an inheritance and the basis being the unit price on the date of transfer times the number of units. No old purchase dates. Just a new K-1 with a huge capital account basis. Being that I had already held most of them with her for 15-20 years and I probably will hold for a similar period of time the reset was more than welcome.

    Second, I understand your comment on double taxation on the recapture of depreciation even after you have paid capital gains taxes. I was, in fact, audited about this a couple years ago. The auditor was certainly less familiar with MLP taxation than me, but he quickly agreed that if I paid capital gains on the distributions that I should not be taxed again on the same income. That certainly would not hold up in a tax court, but sometime soon with MLPs continuing to grow we are going to need to get some modifications and clarifications as to what was intended with the statutes.

    ARB
    Mar 26 02:49 PM | 5 Likes Like |Link to Comment
  • REIT Focus: Realty Income Corporation [View article]
    Your comments make absolutely no sense. You state the purchase is at a 6% cap rate when O stated otherwise.

    Then you suggest O should be valued at $20 when later you said, "At a price of $37 per share, O is trading at a cap rate of 5.5% which we believe is too low of a valuation for a net lease REIT with this type of portfolio." That says O should trade higher than $37. Which is it?

    The comment where MLPs are compared to MLPs is also not very helpful. That comment also uses P/E to evaluate O. P/E ratios are not helpful for either MLPs or REITs as everyone should know.
    Nov 17 12:25 PM | 5 Likes Like |Link to Comment
  • Kinder Morgan Energy Partners A Magnificent Oil And Gas Play [View article]
    You article is well thought out.

    The only problems are that MLPs are not required to pay out anything - you have confused that with REITs. The coverage ratio is important because it give you guidance on the company ability to increase the distribution in the future. Based on this KMP will have difficulty in increasing much going forward given it splits its DCF 50/50 with KMI.

    KMP is indeed a great company with a super track record. Just confused you have compared it to a General Partner - ETE - who is in huge transition and poor fundamentals going forward, BWP which has stumbled badly with cost overruns and had to have its GP bail it out. There are other MLPs showing significantly greater promise with good track records. MWE and EPD are in the same business as KMP and both have lower payout ratios and faster growing DCF than KMP.
    Feb 7 02:54 PM | 5 Likes 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
  • 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.

    ARB
    Apr 2 03:22 PM | 4 Likes Like |Link to Comment
  • Weekly Intelligence For MLP Investors [View article]
    The section on mutual fund flows is excellent. Only suggestion is a short disclaimer that before investing in a MLP every investor should understand the tax consequences of MLPs. The primer at National Association of Puiblically Traded Partnership called MLPs 101 is excellent.

    Thanks again.
    Mar 15 04:05 PM | 4 Likes Like |Link to Comment
  • Seadrill's Path To Problems [View article]
    Too many mistakes and the author misses the point when comparing SDRL to others the new rigs with SDRL vs an almost 20 year old situation with RIG!

    If SDRL has a problem why and how were they able to get a long term 5 rig deal with Pemex for top dollar?

    Your crystal ball seems to be a bit cracked.
    Feb 19 09:19 AM | 4 Likes Like |Link to Comment
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