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arbtrdr

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  • MLP Suspends Distributions - Second MLP To 'Blow Up' In 2014 [View article]
    You can continue to put out anything you want without really needing to suppport your position. Atlas has already put out an early press release on guidance and announced a profitable processing plant that certainly would not have been announced until the earnings call. The attack by Hedgeye will be interesting and IMO probably go quietly go away.

    EROC has a history of distributions being cut in both 2009 and 2011 so really nothing new. Selling of the midstream sassets was a way to possibly survive or sell the E&P side of the business. The problem is that EROC did not "blow up" in 2014. EROC has been troubled since its formation and its distribution has gone up and down in its short history. The flaming of MLPs using such headlines are doing a disservice to the segment.
    Apr 24, 2014. 10:46 AM | 6 Likes Like |Link to Comment
  • Linn Energy: A Closer Look At LinnCo's 'Dividend' [View article]
    What is the difference with the Lineco dividend regarding the classification?

    If a dividend you pay at dividend rate in the year issued. If a non-dividend payout you reduce your basis and pay at capital gains on sale. Sounds like a better deal as taxes a deferred until you sell. The article makes it sound like a bad deal when except in a few situations it would actually be good for taxpayers.
    Apr 23, 2014. 10:25 AM | 6 Likes Like |Link to Comment
  • Kinder Morgan: Some Good News And Some Bad News [View article]
    Morningstar would not know a MLP from a kangaroo. Thier metrics are not set up to give meaningfull info on ANY MLP.
    Mar 17, 2014. 10:21 AM | 6 Likes Like |Link to Comment
  • Weekly Intelligence For MLP Investors [View article]
    wm/Mike - If you use Turbo Tax you simply enter the numbers from your K-1 in the interview. Same thing if you sell all of your units. The only complication is a sale of part of your units. Bottom line there do not do it.

    The IRS is not likely to ever have a tax question on a K-1. They have no more clue of the vague regualtions and arcane law than you do. I would suggest that about $75 per K-1 for some clerk to enter the data into a computer using a program almost exactly the same as Turbo Tax is a waste of lots of money.

    FWIW I have most of my assets in MLPs for over 20 byears now and own over 20. Is it worth the 4 hours it took me to enter the K-1 data to save $1450? Absolutely. Is having someone to sit with me during and audit worth the $1450? No, but if I was concerned TTax offers audit assistance guarantee for about $50. I also suggest that few accountants or even CPA have much of a clue on MLPs.
    Mar 16, 2014. 11:42 AM | 6 Likes Like |Link to Comment
  • U.S. Natural Gas Stores Are Dangerously Low, That's Good For Pipeline And Storage Companies [View article]
    David - The global warming issue is one I do not care to tackle. Good analysis but a couple of problems in your basic thesis.

    NG prices are lower in the future than today. This has made NG storage lower and not profitable for the last six to 9 months - NOT more profitable. No company is going to pay to store gas that is likely to be worth less in the future.

    Your comments on infrastucture are correct. Billions is being spent on everything from gathering to processing to transportation by companies including the KM family and EPD. It is a bit of a stretch to call EPD a pipeline company as it gets most of its $$ from processing, storage and now a growing exporting of propane. That said, much of the problem with spot prices of NG have been created by the stupid regulators and people who forced the closure of coal generating plants without having an alternative in place. Great to shut down an older coal plant for NH, but unless your new NG peaker has a pipeline and guaranteed supply of NG you are likely to be a bit cold and dark!
    Mar 10, 2014. 10:36 AM | 6 Likes Like |Link to Comment
  • Atlas Pipeline Partners Looks Appealing [View article]
    Thomas - DRix obviously does not understand MLPs.

    Am not sure you exactly make what a MLP is and does very clearly either. The "profits" for a MLP are measured very differently by using Distributable cash Flow (DCF). The reason DCF did not go up was not one time events as you suggest, but rather a combination of contracts that are POP and KW and thus not very profitable when NGL prices are low / along with the new acquisitions were purchased at EBITDA multiples that were not immediately accretive. That said a great and logical analysis.

    A suggestion in that you say you are a short term trader is to always discuss the handling of the distributions on a K-1 and the tax implications/complicat... of trading MLPs. Selling part of a position one has held makes the situation more complicated and potentially expensive come tax time. NAPTP.org has a great primer on MLPs at their web site. Just using the word distribution is a step in the right direction. Congrats on that.

    Finally, isn't it important to discuss that APL has a GP that takes a huge chunk of that cash flow and the GP agreed to a waiver of contributions in 2014 that will "turbo charge" the distribution CAGR rate in 2014? That contribution will provide about 1/2 of the increase in distributions.
    Jan 3, 2014. 03:44 PM | 6 Likes Like |Link to Comment
  • MarkWest Is A Must Sell [View article]
    EPD has run a coverage ratio in the 1.4-1.6X since the financial debacle of 2008-9. You need to go back a number of years to get to when they were at 1.2X. Where were you a couple of quarters ago when MWE had a coverage ratio of 1.6X? Did not hear complaints then. Now that they have ramped up their growth to the 20% a year area and thus cost themselves at least $100M a year you complain about a secondary. Do not understand your reasoning.

    MWE is building 200K processing plants with a cookie cutter plan. They thus save on construction costs and reduce unpleasant surprises. Since the processing volumes on their new build plants are fee based with guaranteed volumes how can the DCF not follow?

    There certainly are some people posting here who do not understand MLPs - a comment that the P/E ratio is too high shows they need education. The sales number for MWE is also a meaningless metric because in their new plants they do not need to buy and sell the NG/NGLs and thus the sales number is not inflated.

    Al - A comment - MWE does NOT own any oil producing properties. MWE does not produce oil or drill for NG. They are a midstream processor. Again do some research on MWE,. Read about the company and go to NAPTP.org and read their primer called MLPs 101.
    Dec 18, 2013. 12:05 PM | 6 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, 2013. 06:09 PM | 6 Likes Like |Link to Comment
  • 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, 2011. 06:23 PM | 6 Likes Like |Link to Comment
  • MLP Suspends Distributions - Second MLP To 'Blow Up' In 2014 [View article]
    Josh - Why write this? EROC agreed in its sale of the midstream assets not to pay out $$ this quarter. There is no new news. There was no probability of a distribution cut being priced in at under $5 because basically they were selling a huge chunk of the company and agreed to suspend. EROC was undwer capitalized and in a boom or bust sector of the market. They agreed to sell their midstream assets - all of them - to RGP in DECEMER!

    As to the company going forward - what will it look like? This is old news.
    Apr 24, 2014. 08:49 AM | 5 Likes Like |Link to Comment
  • The Next MLPs To Crash? Hedgeye Targets Another Pipeline MLP [View article]
    APL has a track record under the Cohens that is less than perfect. Start with an expensive and failed buyout of a pipeline in Alaska. Next move to a failed buyout/merger with a coal company in Wyoming. Move on to a system of hedging that almost put APL into bankruptcy. Recently as another posted already a writedown of the Cardinal buyout and a pushback on distribution increases. APL also certainly does have issues with POP contracts that are not going to be very profitable until ethane prices rise circa maybe 2016 or 2017.

    What may be different is Cooperman will definately push back and Hedgeye is really crappy (no apology for the word) in tweeting they are going to publish something 3 days in the future. Thus those that received the tweets got a head start to sell. Maybe this time the SEC should investigate Hedgeye instead of the MLP. Tweeting ones clients that you are going to do something is simply manipulation.
    Apr 21, 2014. 05:49 PM | 5 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, 2014. 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, 2014. 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, 2014. 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, 2014. 08:28 AM | 5 Likes Like |Link to Comment
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