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arbtrdr

arbtrdr
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  • 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, 2013. 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, 2013. 12:44 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, 2013. 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, 2012. 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, 2012. 02:54 PM | 5 Likes Like |Link to Comment
  • Energy Transfer Partners' Return To Distribution Growth Was Predictable [View article]
    The Valentium analysis for value is excellent. Taking crediot for making the call for ETP returning to distribution growth is almost as silly as Al Gore inventing the internet. Almost every analyist and the company itself had said they would return to distribution growth, many before your call. Understrand you do not choose the headlines, but this one is bad!

    An $80 valuation is way too hiugh with interest rates at some point in the future rising. Most technical analysis of MLPs suggest the average yield of midstream MLPs rising from the current approx 5.2% to the 6% area over the next 3 years. ETP is going to need consistent rises in distributioon to maintain its unit price.

    Last, not sure why you suggest ETP pays a dividend. Such a comment both misleads investors and understates the tax laibility on sale. MLPs are a very different breed and such a disclaimer at least such be part of nay MLP article.
    Jun 22, 2014. 03:21 PM | 4 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, 2014. 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, 2014. 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, 2014. 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, 2014. 09:19 AM | 4 Likes Like |Link to Comment
  • Baytex Energy Expands Into The Eagle Ford [View article]
    On acquitition deals a couple things usually happen. The price of the acquirer goes down. Then people do a bit of reading about the deal and the price then moves either up or down. In the case of BTE the price moved up .80US in a couple hours as people relized what the deal included.

    The most important thing about this deal is what BTE bought - using an analogy I read elsewhere - was the very best house on the very best street in the very best town. It bought acreage that is completely proved and with one of the three best operators in the US.

    Hivoltage - wondering why you are suggesting buying Saskatchewan small properties? Many wells there do not even have electricity and are drilled using generators. trucking oil to a terminal and using rail is not cost effective and if oil prices drop then heavy oil is mostly dead.

    I bought a bunch of BTE when it cinverted to a CanRoy. Have reinvested by dividends and doubled up yesterday. BTE will be able to comfortably pay a 6% dividend and reitre a significant amount of the assumed debt. Also producting about $350M in cash from the US takes away any exchange issues. They cvan pay the USD denominated debt with US dollars.

    Buying EF also gave BTE two things - A small operated interest where they will drill 7 or 8 wells this year and it helps as the author stated with the takeaway problem for WCS oil. That problem is not going away. The reason is simple - operators are becoming less and less wiling to guarantee volumes to get pipelines built. OKS had a line fail in the Bakken and BWP/WPZ and MWE/KMP are both having problems getting one going for NGLs out of the Marcellus. Ditto with the EPD comment that committments are becoming more difficult. This means dependence on rail or truck. We all know what a disaster that has been in the last months. Thus the WTI/WCS spread is likely to stay high while the Cushing differential is going to come down as more capability comes on line to get oil to the gulf.
    Feb 8, 2014. 07:01 PM | 4 Likes Like |Link to Comment
  • Propane Prices Have Been Rising. Why? Who Benefits? Who Is Hurt? [View article]
    Last - EPD, MWE and others in your article are MLPs and do not and never have paid a dividend. They are partnerships that pay distributions and tax liability is reported using a K-1. This is very important and all potential investors should understand the differences and tax consequences before investing in a MLP.
    Jan 10, 2014. 04:26 PM | 4 Likes Like |Link to Comment
  • MarkWest Is A Must Sell [View article]
    Our author either does not get that or refuses to do so. When someone makes very public statements about a company and some of them are wrong I accept it as a simple mistake. When they refuse to admit or discuss their comments or error that is unforgivable.
    Dec 18, 2013. 05:26 PM | 4 Likes Like |Link to Comment
  • Over-Loved MarkWest Under-Delivers [View article]
    Some thoughts -

    MWE has some 19 major projects in service (3 finished in the last few days) and one more to come this quarter and 4 or 5 next quarter. This will significantly increase DCF. Your calculations here are definately a bit light.

    Problems this quarter - 4 of them. A NGL pipeline break was an act of God and fixed, SXL had pipeline issues, MWE had startup issues and will have more, and MGL prices - hopeless until at least 2015.

    As to units issued - Did yuor calculation forget the 4M class B units that vest midyear. I get an even higher total, but think MWE will issue about a 50/50 mix this year. I think you forgot the ATM units they have been issuing - this part is not good.

    As to shorting MWE - always painful with a MLP because of the need to pay the distribution and the change of ownership. Would think some short term issues but longer term MWE is growing and with fixed fees.
    Nov 13, 2013. 08:58 AM | 4 Likes Like |Link to Comment
  • Ponzi Or MLP? Linn Energy's Unsustainable Distributions [View article]
    Only 1 question - Why are so many comments about your articles deleted?
    Jul 12, 2013. 06:26 PM | 4 Likes Like |Link to Comment
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