Enterprise Products Partners: Defensive Business Model With Strong Distributions [View article]
Good article. The glaring error is EPD is NOT planning on raising its distribution by 6.5% in Q4 of 2012. They announced a distribution increase in October including a .005 special raise from .635 to .65 in Q3 that was paid in November of 2012. This increase for the current quarter in this paragraph is very confused and suggest something that is not true. EPD also preannounced increases of .01 per quarter for the coming year with the possibility of another special increase. That should mean an announcement shortly to .66 for this quarter to be paid in February. That would be a quarterly increase of 1.5% and a YoY run rate increase of 6.45%.
Also KMI is the general partner of KMP. Wouldn't comparing KMP be a better comparison since what KMI owns is a bunch of units in KMP/R and EPB along with the incentive distribution rights for both. And yes, I understand they also have a bunch of assets they got in the EP buyout in the process of being dropped down.
There are two parts of your comment which need some clarification. I need to note that I consult with Intiut for their TurboTax program. I am up to date on the tax issues.
The sale of some of the units a person owns from a MLP results in exactly the calculation you made. Many of the MLPs post an operating loss and passive losses cannot be taken to offset gains except for the same company. Accumulated passive losses also cannot be taken on a partial sale, only a complete sale.
Where your calculations have problems is for example using EPD, I have accumulated allocated Line #1 on my K-1 losses over the years that are equal to about 1/3 of my purchase price. I have similar operational losses from most of my other midstream MLPs. Those losses are suspended until I sell all of my units. On sale my profit is calculated - in simplified form - Start with the current capital account basis and ADD the suspended loss carryforward. Subtract that amount from the amount originally paid and you have the ordinary income portion. Obviously you pay capital gains rate on anything received over the purchase price.
Yes there are some additional recapture rules on some sections and I certainly agree those rules are both arcane and not followed by either the IRS or the public.
Rhino Resource Partners: Ready To Charge Into The Future [View article]
Three thoughts on your excellent article.
#1 - RNO is certainly capable of taking over the Patriot Coal JV. A buyout there would probably offer an attractive purchase price.
#2 - A bit surprised you did not discuss the oil/gas leases a bit more in detail as these could definately provide significant cash flow starting in 2013 as the GPOR wells are now hooked up and flowing.
#3 - Why no discussion of the GP waiving distributions on its subordinated units? The coverage ratio given this fact is actually over 1.0X isn't it? Wexford seems to be willing to give RNO a big amount of support.
Realty Income: Excellent Investment, Just Not Right Now [View article]
The brand is the name of the tennants like Diageo and others. You do understand the defination of subprime real estate and know full well that O is not sub prime. You have always enjoyed posting off color and stupid comments are part of destroying the O message board. Have a nice day.
As to O being overvalued. The slowing of dividend increases was part of the real estate melt down. O weathered it well and is doing fine. Increases are returning to the norm and coverage ratios have improved. I too am not buying at this current 40ish level but I hold and will buy on dips.
Enterprise Product Partners: Stay Patient And Enjoy The Yield [View article]
It almost seems as if EPD moves into pause mode when the amount of organic projects as a % of market cap gets close to or exceeds 20%. The organic projects certainly delay DCF as there are capitalized expenses and borrowing/unit costs to be paid before projects go on line. Then usually a ramp up for some months to get full production mode.
EPD has a lot planned going forward and also a higher than normal % of projects either just completed or coming on line shortly. That said EPD is going to build like crazy as ong as it can borrow for next to nothing. Management is sound and EPD has a great track record of coverage and retained earnings. Lots more secure when you compare to KMP and its basically 1.0X coverage.
EPD is not exciting but steady. I will be happy to take a distribution of over 5% and steady with a 15 year track record of price appreciation.
6% Dividend Stock With Anticipated Dividend Increases [View article]
First a bit of disclosure. I am long EPD through a predessor company since 1995 and bought MWE shortly after its IPO.
I thought the yield chart comparing MWE to EPD was extremely insightful. The two have been in correlation except for two times. The first was the credit blowup on 2008-9. During that time MWE looked for a while as if it might even default because of no $$ available to complete its projects in progress while EPD had the deeper pockets and investment grade giving it access to capital borrowing.
Currently MWE is paying a significantly higher yield. I explain this via MWE issues rather than anything it did correctly. MWE bought out EMG in the Liberty JV and the Keystone assets paying IMO too much in that neither acquisition will be accretive in 2012 per MWE press release info. In future years the ROI should be significant but this combined with poor NGL pricing has certainly hurt the MWE unit price in the short term. It also might have put a delay on the MWE stated goal of getting investment grade credit ratings.
EPD has certainly had its own issues in that buying out the GP interest was about 5% dilutive and DEP probably a net of zero in year #1 (similar to MWE) and this along with EPD refusing to increase the rate of distribution increases has slowed the unit price here as well.
Both are remarkably similar in their goals, the recent acquisitions and problems with NGLs. EPD is sort of stodgy (for MLPs) and secure, while MWE has expanded at a rate that is set to double again in the coming two years. With some 20 significant projects under construction there is certainly more risk with MWE than EPD.
What other MLPs in the midstream area do you like at today's prices and an eventual interest rate hike coming.
My Dream MLP Security: Open Letter To MLPs And MLP Investment Funds [View article]
The idea is great but getting sufficient assets or investors from many states make the issue moot - simply not realistic. Lots of assets but few buyers in many states. My biggest question is wouldn't the regulatory and admin cosrts offset any benefits?
I have invested a 6 figure amount in MLPs and simply file my 990T each year to preserve losses in my IRAs. Never been an issue for state filing. You need to limit issues like PAA and STON that throw off lots of income and make a careful mix. The IV board has great information that makes filing for out of state issues a non issue.
Master Limited Partnerships: Planning And The Death Tax [View article]
I have partially solved the issue by selling my MLP IRA holdings about every two years. I do a simple swap. Those held in my account are sold and purchased in my wifes account and vice versa. This resets the basis on both accounts keeping UBTI under $1000 and avoids the wash sale problems on passive losses.
Enterprise Products Is A Great Long-Term Play [View article]
Articles on MLPs need to educate and focus on DCF not earnings. Also MLPs do not pay dividends. A VERY important consideration. Last, Zacks data while covering all the standard numbers for a corporation, only recently even acknowledged a MLP existed. MLPs are VERY different.
Income Investors: 5 Under-The-Radar Dividend Stocks To Consider [View article]
This article is not very meaningful. None has ever paid a dividend! The companies mentioned are MLPs that pay distributioons and are rated by DCF (distributable cash flow) and the coverage of those distributions and not P/E ratios by knowledgeable brokers and investors. Distributions are very different from dividends. No 1099s, but instead K-1s. Tax deferral. A myriad of differences.
Before you write another article on MLPs learn a bit about them and then educate potential buyers. Getting a surprise K-1 in February instead of a 1099 has created many problems in the past. Articles like this add to future problems. If you doubt this call any MLP and ask about the uninformed that by MLPs.
Three MLPs Outside The Margin Of Safety [View article]
Agree with KMP and BPL but not EPD. Confused why you are not looking at distribution to DCF after discounting one time events. P/E has never had a very good correlation to MLP performance.
Why MLPs Are Extremely Overvalued As An Asset Class (Part 3) [View article]
As one that has held several MLPs for many yearsI would point out that I have laways had distributions from my MLPs deferred by at least 80%. Also only a very small part of distributions is ordinary income.
Second, my largest positions are EPD and MWE. Neither of these has a general partner to create the significant drag on earning growth you discuss for distributable cash flow.
I do admit I have held EPD for over 15 years (including predessor companies) and MWE for 7. I reinvest my distributions and being retired hope the current tax laws will provide the capital gains tax to go away on my demise. In the meantime my distributions are almost all considered capital gains for EPD (not ordinary income) since my capital account is zero.
Last, trading in and out of MLPs create all sorts of problems relating to taxes etc. For the long term holder MLPs have shown a CAGR above almost every other asset class. I cannot predict the future but know that with EPD I receive more $$ every quarter than I originally invested in 1995.
More Wild Trading In Magnum Hunter Resources [View article]
Mike - They hired 16 more staff in q3 and several more in Q4. Do not have numbers since 1/1/13. MHR was certainly not up to par on keeping up with needs here. Hope GE learned a lesson.
Ampio Pharma Initiates Phase III, Investors Extend Momentum [View article]
Michel - The current run-in study regarding dosing is actually technically a Phase II study. That is according to both AMPE in their 10Q and the FDA. Their 10Q data is below.
"Ampion for Osteoarthritis of the Knee
In December 2012, we submitted an IND to the FDA for the Phase 3 pivotal trial based upon the guidance received at the pre-IND meeting with the FDA in May 2012. Our prior IND submission and FDA guidance suggested we would complete two Phase 3 studies (AP-003 and AP-004) with respect to Ampion�, each enrolling approximately 800 patients. In February 2013, we received new formal guidance from the FDA indicating that the Company should conduct a dose ranging study "as a Phase 2 dose-escalation study or as a run-in study for one of the Phase 3 studies." Accordingly, we submitted an updated trial protocol to the FDA and they approved it in late March. Known as the SPRING trial, Ampion is being evaluated for its effect on reducing pain as a single intra-articular injection into the knee in 4 milliliter (mL) and 10 milliliter (mL) volumes as compared to placebo at twelve weeks. The study enrolled in excess of the targeted 320 patient goal. The study was designed as a run-in to a Phase 3 pivotal trial which we will initiate once the optimal volume is determined and the proposed pivotal trial is properly powered to achieve its scientific objectives. Twelve week primary endpoint data are expected in the third quarter of 2013. We also modified our contract with our own Ampion clinical research organization (Ampion CRO) to reflect the revised IND. The contract total is approximately $2.5 million and is expected to be paid over the course of the next eight months, subject to the achievement by the Ampion CRO of specified milestones. "
Ampio Pharma Initiates Phase III, Investors Extend Momentum [View article]
Adam - We certainly are grumpy today. As to accuracy - AMPE issued their 10Q with very clear comments about dates and direction. Some of those varied from the SA article.
Enterprise Products Partners: Defensive Business Model With Strong Distributions [View article]
Also KMI is the general partner of KMP. Wouldn't comparing KMP be a better comparison since what KMI owns is a bunch of units in KMP/R and EPB along with the incentive distribution rights for both. And yes, I understand they also have a bunch of assets they got in the EP buyout in the process of being dropped down.
Hello Taxes... Goodbye MLPs [View article]
The sale of some of the units a person owns from a MLP results in exactly the calculation you made. Many of the MLPs post an operating loss and passive losses cannot be taken to offset gains except for the same company. Accumulated passive losses also cannot be taken on a partial sale, only a complete sale.
Where your calculations have problems is for example using EPD, I have accumulated allocated Line #1 on my K-1 losses over the years that are equal to about 1/3 of my purchase price. I have similar operational losses from most of my other midstream MLPs. Those losses are suspended until I sell all of my units. On sale my profit is calculated - in simplified form - Start with the current capital account basis and ADD the suspended loss carryforward. Subtract that amount from the amount originally paid and you have the ordinary income portion. Obviously you pay capital gains rate on anything received over the purchase price.
Yes there are some additional recapture rules on some sections and I certainly agree those rules are both arcane and not followed by either the IRS or the public.
ARB
Rhino Resource Partners: Ready To Charge Into The Future [View article]
#1 - RNO is certainly capable of taking over the Patriot Coal JV. A buyout there would probably offer an attractive purchase price.
#2 - A bit surprised you did not discuss the oil/gas leases a bit more in detail as these could definately provide significant cash flow starting in 2013 as the GPOR wells are now hooked up and flowing.
#3 - Why no discussion of the GP waiving distributions on its subordinated units? The coverage ratio given this fact is actually over 1.0X isn't it? Wexford seems to be willing to give RNO a big amount of support.
Realty Income: Excellent Investment, Just Not Right Now [View article]
As to O being overvalued. The slowing of dividend increases was part of the real estate melt down. O weathered it well and is doing fine. Increases are returning to the norm and coverage ratios have improved. I too am not buying at this current 40ish level but I hold and will buy on dips.
Enterprise Product Partners: Stay Patient And Enjoy The Yield [View article]
EPD has a lot planned going forward and also a higher than normal % of projects either just completed or coming on line shortly. That said EPD is going to build like crazy as ong as it can borrow for next to nothing. Management is sound and EPD has a great track record of coverage and retained earnings. Lots more secure when you compare to KMP and its basically 1.0X coverage.
EPD is not exciting but steady. I will be happy to take a distribution of over 5% and steady with a 15 year track record of price appreciation.
6% Dividend Stock With Anticipated Dividend Increases [View article]
I thought the yield chart comparing MWE to EPD was extremely insightful. The two have been in correlation except for two times. The first was the credit blowup on 2008-9. During that time MWE looked for a while as if it might even default because of no $$ available to complete its projects in progress while EPD had the deeper pockets and investment grade giving it access to capital borrowing.
Currently MWE is paying a significantly higher yield. I explain this via MWE issues rather than anything it did correctly. MWE bought out EMG in the Liberty JV and the Keystone assets paying IMO too much in that neither acquisition will be accretive in 2012 per MWE press release info. In future years the ROI should be significant but this combined with poor NGL pricing has certainly hurt the MWE unit price in the short term. It also might have put a delay on the MWE stated goal of getting investment grade credit ratings.
EPD has certainly had its own issues in that buying out the GP interest was about 5% dilutive and DEP probably a net of zero in year #1 (similar to MWE) and this along with EPD refusing to increase the rate of distribution increases has slowed the unit price here as well.
Both are remarkably similar in their goals, the recent acquisitions and problems with NGLs. EPD is sort of stodgy (for MLPs) and secure, while MWE has expanded at a rate that is set to double again in the coming two years. With some 20 significant projects under construction there is certainly more risk with MWE than EPD.
What other MLPs in the midstream area do you like at today's prices and an eventual interest rate hike coming.
ARB
My Dream MLP Security: Open Letter To MLPs And MLP Investment Funds [View article]
I have invested a 6 figure amount in MLPs and simply file my 990T each year to preserve losses in my IRAs. Never been an issue for state filing. You need to limit issues like PAA and STON that throw off lots of income and make a careful mix. The IV board has great information that makes filing for out of state issues a non issue.
Master Limited Partnerships: Planning And The Death Tax [View article]
Enterprise Products Is A Great Long-Term Play [View article]
Income Investors: 5 Under-The-Radar Dividend Stocks To Consider [View article]
The companies mentioned are MLPs that pay distributioons and are rated by DCF (distributable cash flow) and the coverage of those distributions and not P/E ratios by knowledgeable brokers and investors. Distributions are very different from dividends. No 1099s, but instead K-1s. Tax deferral. A myriad of differences.
Before you write another article on MLPs learn a bit about them and then educate potential buyers. Getting a surprise K-1 in February instead of a 1099 has created many problems in the past. Articles like this add to future problems. If you doubt this call any MLP and ask about the uninformed that by MLPs.
ARB
ARB
Three MLPs Outside The Margin Of Safety [View article]
Why MLPs Are Extremely Overvalued As An Asset Class (Part 3) [View article]
Second, my largest positions are EPD and MWE. Neither of these has a general partner to create the significant drag on earning growth you discuss for distributable cash flow.
I do admit I have held EPD for over 15 years (including predessor companies) and MWE for 7. I reinvest my distributions and being retired hope the current tax laws will provide the capital gains tax to go away on my demise. In the meantime my distributions are almost all considered capital gains for EPD (not ordinary income) since my capital account is zero.
Last, trading in and out of MLPs create all sorts of problems relating to taxes etc. For the long term holder MLPs have shown a CAGR above almost every other asset class. I cannot predict the future but know that with EPD I receive more $$ every quarter than I originally invested in 1995.
More Wild Trading In Magnum Hunter Resources [View article]
Ampio Pharma Initiates Phase III, Investors Extend Momentum [View article]
"Ampion for Osteoarthritis of the Knee
In December 2012, we submitted an IND to the FDA for the Phase 3 pivotal trial based upon the guidance received at the pre-IND meeting with the FDA in May 2012. Our prior IND submission and FDA guidance suggested we would complete two Phase 3 studies (AP-003 and AP-004) with respect to Ampion�, each enrolling approximately 800 patients. In February 2013, we received new formal guidance from the FDA indicating that the Company should conduct a dose ranging study "as a Phase 2 dose-escalation study or as a run-in study for one of the Phase 3 studies." Accordingly, we submitted an updated trial protocol to the FDA and they approved it in late March. Known as the SPRING trial, Ampion is being evaluated for its effect on reducing pain as a single intra-articular injection into the knee in 4 milliliter (mL) and 10 milliliter (mL) volumes as compared to placebo at twelve weeks. The study enrolled in excess of the targeted 320 patient goal. The study was designed as a run-in to a Phase 3 pivotal trial which we will initiate once the optimal volume is determined and the proposed pivotal trial is properly powered to achieve its scientific objectives. Twelve week primary endpoint data are expected in the third quarter of 2013. We also modified our contract with our own Ampion clinical research organization (Ampion CRO) to reflect the revised IND. The contract total is approximately $2.5 million and is expected to be paid over the course of the next eight months, subject to the achievement by the Ampion CRO of specified milestones. "
Ampio Pharma Initiates Phase III, Investors Extend Momentum [View article]