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Willie119

Willie119
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  • Midstream MLP Stats 5-09-14 [View instapost]
    Thanks, its obvious now that you spell it out for me!

    I guess what my brain was wrapped around is that I was thinking its more important to know what the CAGR is for these MLPs (to help gauge goodness or badness as a prospective investment). Its seems somewhat difficult to make those kind of assessments (in regards to CAGR) with knowing just the change in CAGR. For example, a minus 10% (decreasing CAGR) could still result in a very nice overall CAGR. Perhaps I'm still missing something fundamental?
    Dec 5, 2014. 08:49 AM | Likes Like |Link to Comment
  • Midstream MLP Stats 5-09-14 [View instapost]
    Factoids,

    Can you clarify why in several of your posted spreadsheets on MLPs I see that ACMP's CAGR usually showing up as 0.00? (I'm presuming this is the compound annual growth rate of their distribution.) I've owned these units for awhile and have seen some growth in their distributions. Is it showing up as 0.00 because you're not able to acquire the data, therefore you show 0.00 when you've got no data to compute the cell's value?

    Regards,
    W
    Dec 4, 2014. 07:25 PM | Likes Like |Link to Comment
  • Pipeline firms slammed after OPEC decision to maintain output [View news story]
    @ckarabin & @GonzoOne,

    I suspect you may be discussing apples and oranges. I've seen figures where the cost for Saudis to extract and transport oil to market is among the lowest of all oil producers. However, many sources indicate they need ~$80-$95/bbl to balance the country's budget. That is different from break even on oil extraction/transportation costs.

    Just because the Saudis need those higher prices to balance the country's budget doesn't mean they can't run a deficit for quite some time. They have an excellent credit rating (AA last time I looked) and they currently have a very low debt/GDP ratio (suggesting they can afford to take on more debt very easily).

    If you consider that Europe is close to falling back into a recession, Japan is hurting, and China is growing at slower rates, this suggests weak demand going forward.

    Its possible to see oil prices going lower (obviously hurting the marginal high cost shale producers, as well as Russia, Iran, and Venezuela), and potentially staying low for many months if not a couple of years before rebounding to the $100-$110/bbl range.
    Dec 2, 2014. 08:12 PM | Likes Like |Link to Comment
  • Learning To Dislike MLPs [View article]
    I'm wondering if the price of oil figured into those projections of build out costs for energy related infra-structure? Any thoughts on if, and by how much oil price fluctuations influence those projections?
    Dec 2, 2014. 01:03 PM | Likes Like |Link to Comment
  • Floating-Rate Senior Bank Loans: Safer, Higher Yielding Alternative To Short-Term Bonds [View article]
    So, if I play a game of speculation here, and presume that the next interest rate rising cycle might look like the last "engineered" cycle (roughly 2004/04 - 2006/07). I'm basing this off of a guess that the Fed is likely to highly telegraph the rate raising cycle. It also seems reasonable to assume that it will be a planned/smooth transition much like the tapering of QE3 (all dependent on economic data of course). Also speculating that Libor 90 will somewhat track the Federal Funds rate, and I calculate that under those conditions it could take 7-8 months of interest rate increases before Libor 90 gets above a floor of 1.5% (using a current rate of 0.23%, and that assumed floor rate). That is quite a bit of time without seeing any improvements in the distributions. Some retail investors might get nervous and start unloading their positions.

    On top of those assumptions/guesses, the rate that JFR borrows at is stated in the prospectus to be a short term floating rate. Hopefully the borrowing rate won't be moving to higher rates faster than the senior loan rates (prior discussion). I can see some possible volatility under these circumstances, especially if JFR is not performing as "expected" under a raising rate environment.

    Can you shed some light on this speculation (which is slowly starting to become fear)? :-)
    Jun 25, 2014. 02:24 AM | 1 Like Like |Link to Comment
  • Floating-Rate Senior Bank Loans: Safer, Higher Yielding Alternative To Short-Term Bonds [View article]
    waldipup - My understanding is that the "low risk" assessment is based on the fact that the default rates on these loans are at (or near) all time lows. There is also diversification benefits to a CEF like JFR that spreads some of this default risk across several industries and many companies. Finally, I'm under the impression that should a default occur, these loans are at the top of the capital pecking-order, therefore the recover rates tend to be strong (~ > 70%).
    Jun 23, 2014. 04:00 PM | Likes Like |Link to Comment
  • Floating-Rate Senior Bank Loans: Safer, Higher Yielding Alternative To Short-Term Bonds [View article]
    Anthony - Thanks. Just so I'm clear, when you state "between 50 - 150bp" you mean that current Libor rates would have to increase by 0.5% to 1.5% in order to get the current Libor rate above the floor rate, so that the current Libor rate is what drives the floating rate (instead of the floor)? I presume the floor rate is established at the time the loan originates, so it is a floor above the current Libor at that origination time.

    Is the 3 month Libor usually the rate that is used (I presume the US$ one)? If you have a symbol or other means for us to track that rate that would be appreciated.
    Jun 23, 2014. 03:54 PM | Likes Like |Link to Comment
  • Floating-Rate Senior Bank Loans: Safer, Higher Yielding Alternative To Short-Term Bonds [View article]
    My understanding is that there are two potential time lags that will cause a lag in JFRs floating rate loans raising after Libor start raising (a presumption of a future raising rate environment). One would be the "reset" time lag built into the loan itself (I believe these are often in the 1 - 3 month range). The other would be the "floor" built into the loans above the current Libor rate. If the floor is above the Libor rate when the loan resets, then there would be no change in the payments produced by the loan. Libor would need to be above the floor rate when the loan resets, in order for the loan to start producing higher payments (i.e. the benefit of owning "floaters").

    Is my understanding consistent with how these floating rate loans work, if not can you clarify? Also, how can one determine what the current funds average or mean "floor" is for their loans in their portfolio? It seems like knowing this number should set expectations for how much Libor has to raise in order for the fund holding the loans to start to experience an increase in payouts from its holdings.
    Jun 23, 2014. 10:13 AM | 1 Like Like |Link to Comment
  • Kinder Morgan, Inc: A Steady Dividend Grower With Solid 4.60% Yield [View article]
    Drop Down Confusion?

    I'm a little unclear of the advantages that dropping down assets from the GP/sponsor to an MLP brings to the GP/sponsor. Can you enlighten me on this topic?

    From my very rudimentary understanding a GP/Sp may drop down assets from which they are currently enjoying 100% of the benefit of owning. After dropping down to their MLP, they will receive, depending on IDR tier, lets say 50% of the "value" generated by that same asset (as an example). Albeit, they will also receive additional capital that they can then redeploy in what they believe may be more profitable to them then owning the asset they dropped, but losing 50% (for example) seems a high price and there must be more to the story that I don't understand.

    Do they just drop down under performing assets? Are the assets they drop already fully depreciated by the GP/Sp so that there's no more tax advantage to this dropped asset (to the GP/Sp)? Do the dropped assets create synergies with other assets in the MLP such they more beneficial to the GP/Sp under ownership of the MLP? Granted that the GP/Sp will also have limited partner units; however this by itself doesn't seem to be enough to make that math work out for the GP/Sp.

    Thanks in advance,
    Willie
    Well, after typing up this long winded post, I believe I've seen the "light". Assuming the GP/Sp gets fair market value for the asset dropped, they also get the other benefits (increased IDRs, increased limited unit distributions, etc.) by dropping to their MLP as opposed to selling outright to another interested party. So, by dropping they gain capital PLUS other benefits. Whereas retaining the asset just results in getting the value produced by that asset.
    Jan 19, 2014. 02:48 PM | 1 Like Like |Link to Comment
  • The Coming Market Impact Of Apple's 64-Bit A7 [View article]
    fm,

    Interesting assertion "They are encouraging (read forcing) all app developers to make 64bit native apps first. It's a done deal.".

    - If an app developer wants to reach the largest group of users, why would they do 64-bit native apps first?
    - Can 64-bit native apps run on pre IOS7/A7 iPhones?

    Can you clarify?

    Regards,
    W
    Oct 2, 2013. 11:55 PM | Likes Like |Link to Comment
  • PIMCO And Doubleline Income CEFs: 7.5 To 9.5% Yields At Bargain Prices [View article]
    Regarding performance since there's been a raise in rates (since April/May), I thought that Pimco's PFL was a floating rate CEF. Shouldn't it perform better in a raising rate environment?

    I wonder if its been the raise in medium to longer term rates (without a raise in short term rates) that have hurt PFL (and others since April/May). I'm speculating that many owners have sold their shares when they see that they can get improving returns in less risky investments. While PFL hasn't seen an increase in its returns because short term rates (that I believe its floating investments are indexed to) haven't gone up.
    Sep 22, 2013. 09:47 PM | Likes Like |Link to Comment
  • Natural Gas Boom's Top 3 LNG Exporters: 1st Promising Player, Cheniere Energy [View article]
    Good article, thanks.

    This news from FT.com suggests that the current administration might be supportive of more LNG export approvals by DOE (after the new secretary of energy is named):

    http://on.ft.com/13dTQyi

    Note: I'm not trying to make this post political, I'm just posting what I believe to be pertinent news that could potentially influence regulatory approvals.
    May 6, 2013. 10:12 PM | Likes Like |Link to Comment
  • Linn Energy's Dividend Still Looks Attractive [View article]
    Valuentum - There was an interesting negative article on LINE/LNCOs distribution/dividend in Baron's over the weekend. Could you compare/contrast your analysis with theirs?
    May 6, 2013. 11:00 AM | 1 Like Like |Link to Comment
  • Investors' Primer For Kinder Morgan [View article]
    Its always a pleasure to read about something I didn't understand and have it seem so simple after reading it. Thanks for your clear and concise article on this topic.
    Apr 23, 2013. 12:22 AM | 1 Like Like |Link to Comment
  • Is It Time To Hedge Your High-Yield Portfolio? [View article]
    David,

    Thanks for the article. I've recently been rotating my JNK position into SJNK to be prepared for a raising rate environment. Albeit I maybe early as you suggest in your article. Can you clarify something for me? It could be my assumptions are incorrect:

    #1: The Fed is exploring different "exit" strategies.
    #2: One possible exit strategy being considered is to "ramp" down the amount of their monthly long bond purchases. (while "preserving" the right to ramp them back up if need be).
    #3: Their ramping down of monthly bond purchases is likely to happen well before they start raising their short term rate.

    Your opinon on these assumptions would be appreciated. However, the main question I have is that with those assumptions, wouldn't it be better to short long term bonds?
    Apr 2, 2013. 11:05 PM | Likes Like |Link to Comment
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