Smarty_Pants

Smarty_Pants
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  • GasLog, Golar LNG plunge amid Teekay dividend cuts  [View news story]
    " the market gave very little credit to GLOP for their dividend policy confirmation today. In my mind this shows that they are still lumping the company (and most of its peers) in the segment driven by the oil price. Until that link is broken, the share prices of the marine shippers will not recover." - LNG novice

    And by "not recover" I presume you mean to say "present an outstanding opportunity". :-)

    Personally I hope the current prices last until after the next distribution so I can add shares at a crazy-good value.
    Dec 23, 2015. 08:05 AM | 1 Like Like |Link to Comment
  • Buybacks: A Step In The Right Direction For Golar LNG Partners  [View article]
    "GLOP charters have no termination date?" - sts66

    You are correct. Perpetual was not the proper word to use there.

    I should have said that GLOP can maintain the current distribution for as long as they can continue to charter their current fleet at current rates.

    The dynamics for the LNG market would seem to imply that renewing the current charters for LNG carriers might not be much of a hurdle when they need to do so.

    But "seeming" and "being" can be different things in the future, so that is still a possible risk area and worth keeping an eye on.
    Dec 22, 2015. 02:26 PM | 2 Likes Like |Link to Comment
  • Buybacks: A Step In The Right Direction For Golar LNG Partners  [View article]
    "NMM is perhaps one of the best candidates to commence buybacks now that coverage is high (above 1.5) with no CAPEX requirements and a yield of close to 30%" - Lion Square Investments Ltd

    NMM is somewhat different than the Oil and LNG tankers in that they are involved in dry bulk shipping, which is likely to be more variable than the necessary Oil & LNG space. NMM's $0.21 distribution is also larger than their $0.14 net profit, so roughly 1/3 of their distribution is covered by (mostly) depreciation, which is not a permanent source of money. If the current state of affairs persists long enough, the depreciation money runs out.

    Contrast that to GLOP whose profits ($19+ million in Q3) exceed the distributions ($16- million in Q3). GLOP can maintain the distributions perpetually, regardless of the availability of the depreciation monies.

    For now, NMM can ride it out, but there is a non-zero risk involved with the duration of their depreciation. I imagine that might play into the higher yield available (though the difference might be overdone). It's just something more to take into account before investing.
    Dec 22, 2015. 11:41 AM | Likes Like |Link to Comment
  • Buybacks: A Step In The Right Direction For Golar LNG Partners  [View article]
    A potential secondary use of free cash would be to pay down debt. This also boosts per unit cash flow as the interest expense is reduced going forward. Many of these MLPs have a small float and excessively large buy backs might impact liquidity in the capital markets. Still, at current yields, the best use of free cash is probably to buy back shares and reduce the cost of "high yield" distributions on the MLP.
    Dec 22, 2015. 08:13 AM | Likes Like |Link to Comment
  • GasLog, Golar LNG plunge amid Teekay dividend cuts  [View news story]
    "Given the severe drop in share price, I would hope that GLOP's acquisitions would temporarily stop until share prices rebound." - Smarty_Pants (me)

    I see that GLOP announced just such an intent in a recent press release, hold the distribution constant and delaying any new acquisitions:

    http://bit.ly/1PjxFiU

    KNOP (an oil shuttle tanker leasing partnership) made pretty much the same statement with an additional authorization to repurchase shares and an indication that they had already purchased about 14% of the number authorized.

    http://bit.ly/1PjxFiW

    Looks like both of those MLPs should be able to continue operations without any issues for the next few years, or until the share price recovers high enough to raise capital again.

    Get 'em while they're cheap!
    Dec 21, 2015. 09:19 AM | Likes Like |Link to Comment
  • We Have Officially Reached The End Of The Financial Crisis  [View article]
    "Well the entire economy is dependent on inflation and expanding debt" - snoopy the economist

    One could argue that nearly all the 'growth' in US GDP since 2008 is a result of borrowing.

    As economist Herbert Stein pointed out: "If something cannot go on forever, it will stop." No matter what the FED claims, an economy cannot create prosperity by going ever deeper into debt. At some point the bubble will burst and everyone loses.

    So which is better for Joe Sixpack?

    1) An economy based on debt where he can find a job with a slowly falling wage and slowly rising prices that will end when the bubble pops?

    OR

    2) An econcomy based on rational allocation of capital where he can find a job with a stable or slowly falling wage and slowly falling prices that is sustainable?

    Just because we've mis-allocated trillions building an option 1) economy doesn't mean the proper course of action is to do more of the same on a larger scale to keep things going, at an ever larger cost in the future.

    At some point the bill will come due and, in general, it's usually better to get it sooner rather than later.
    Dec 20, 2015. 11:11 AM | 4 Likes Like |Link to Comment
  • Dividend Growth 50: A Very Happy Anniversary  [View article]
    "Somebody in an earlier comment already proposed a Dogs edition." - Mike Nadel

    OK. Yah got me. I'm a slow reader. I've been able to hide it for a long time, but the jig is up, I guess. I'm just gonna pretend like nobody noticed...

    :-b
    Dec 20, 2015. 10:39 AM | 5 Likes Like |Link to Comment
  • We Have Officially Reached The End Of The Financial Crisis  [View article]
    "On the other hand, a lower inflation rate would be associated with an elevated probability of falling into deflation, which means prices and perhaps wages, on average, are falling" - FED website

    Deflation: A economic state where your savings would buy more stuff next year than it can buy this year.

    Nope. Can't have that.

    As noted above by AllStreets, median wages are already deflating, so what exactly does Joe Sixpack have to fear from deflation that he's not already experiencing?

    At least a state of deflation would stretch any savings he can put away to be more useful in the future as prices also fall (rather than see them march relentlessly higher as they do now).

    Funny how everyone cheers when the price of gasoline goes down because it "frees up" money for spending on other items, yet at the same time we're told deflation is bad. Apparently, by some unstated magical process that's taken for granted by economists, lower prices on other things doesn't free up money to spend elsewhere too.
    Dec 20, 2015. 10:18 AM | 7 Likes Like |Link to Comment
  • Dividend Growth 50: A Very Happy Anniversary  [View article]
    "You could pick 25 of those stocks and then use Mike's data to create you own portfolio" - as10675

    I can see it now. The 'Dogs' of the DG50.

    Better trademark that phrase before it's too late Mike.
    Dec 19, 2015. 02:12 PM | 1 Like Like |Link to Comment
  • Dividend Growth 50: A Very Happy Anniversary  [View article]
    Mike, your results probably would have been much worse if you had included Kodak in that original list .... just sayin'. ;-b

    I'm thinking that 50 years from now KMI will be today's Kodak and your longer term results will demonstrate why the original Nifty 50 turned out to be a pretty good investment over the long run despite all the bad press.

    That's some pretty impressive results for only the first year when you consider that KMI got whacked really good.

    Magic Pants, indeed.
    Dec 17, 2015. 06:00 PM | 5 Likes Like |Link to Comment
  • GasLog, Golar LNG plunge amid Teekay dividend cuts  [View news story]
    "What is GLOP/GLNG's orderbook look like? Any major commitments coming up over the next couple years? Stock = currency for these MLPs, once their buying power dwindled the divvy cut was unavoidable." - kennethjw14

    I can't speak to GLNG, but GLOP's parent company has 12 ships in the pipeline available for drop down. GLOP's presentations indicate that they will only add ships to the LP if their cost of capital is "appropriate".

    Given the severe drop in share price, I would hope that GLOP's acquisitions would temporarily stop until share prices rebound. Their current fleet average contract lasts 8.3 years. GLOP, and by extension GLOG, would be able to maintain current distributions indefinitely until share prices recover.

    Meanwhile, for Q3 2015 GLOP had $19.2 million of profit on $51.4 million in revenues, with $15.7 million in distributions. In addition, they had another $11.2 million in depreciation (revenue not counted toward profits).

    By my reckoning, that leaves them with $14.7 million of cash 'left over' in Q3 which could be split between paying down debt and/or buying shares (with a book value of $17.85 at prices below $14.00).

    Their total debt stands at $771.3 million. Their float is about 32 million shares. If they bought 1 million shares each year (only at prices below $14) they could pay down debt with ~$45 million annually, while maintaining the current distribution.

    When the share price rebounds sufficiently (say to $25-ish) they could then elect to resume adding ships to the LP by re-issuing the shares they bought at $14 or less.
    Dec 17, 2015. 04:53 PM | 2 Likes Like |Link to Comment
  • GasLog, Golar LNG plunge amid Teekay dividend cuts  [View news story]
    GLOP, the LP which generates the income for GLOG, has a distribution coverage ratio of 1.37x for Q3 2015.

    http://bit.ly/1IbhvH0

    The risk of a distribution cut for GLOP or GLOG can't be very high with that kind of free cash flow based on long term contracts which aren't tied to the price of the cargo being transported. Looks like a "blood in the streets" DRIP buying opportunity when the next distribution is paid out.

    It appears that the baby is being tossed out with the bath water, IMHO.
    Dec 17, 2015. 11:15 AM | 6 Likes Like |Link to Comment
  • MLPs: What's In Store For The Sector After The 43% Drop YTD?  [View article]
    Another potential approach might be to keep distributions fixed at current levels and use any remaining free cash flow to buy back their own shares at the discount levels now available.

    It would appear that such an approach would serve to slowly increase the free cash per share over time, without the need to leverage up on debt. If/when share prices do recover toward "more historic" levels those shares can then be re-issued (at a profit) to fund further growth with less debt being necessary.
    Dec 17, 2015. 08:10 AM | 5 Likes Like |Link to Comment
  • Retired Dividend Growth Investors: I Have A Problem.  [View instapost]
    Bob, well wishes recovering from your surgery. That's the more important issue currently. I hope you're up and about again at 100% in short order.

    An alternative place to park your KMI investment to consider might be ARLP or AHGP. Both have suffered huge drops and yield over 16% at currently prices. The Limited Partnership (ARLP) has a solid balance sheet with <0.7 debt/equity and plenty of cash flow to continue paying their distributions.

    The downside is they are both MLPs, so you have a potential UBTI issue in a tax deferred account, and it is possible that price drops will continue as everyone piles on the energy and coal industries.

    Still, it appears that they will be able to continue paying distributions for a long time to come, and at some point the share price may turn back up toward higher ground.

    These shares may not be what you're looking for, but they do provide an alternative to KMI which will allow you to collect the same, or higher, income. Perhaps you can buy only enough to produce your KMI income level, and keep the remainder in cash or buy another DG stock.

    Lots of possibilities to evaluate. The question is, how much do you really NEED that KMI income? Can you get by with less? The MLP space is really beaten up and you can find other solid high yielders there, but they may not have easy to find credit ratings. You might have to evaluate that aspect of each business yourself.
    Dec 6, 2015. 05:24 PM | Likes Like |Link to Comment
  • Investing For Retirement: A Different Strategy For The $7 Million Portfolio  [View article]
    "it would be very different if the larger bills are triggered by a one-time event, such as an IRA conversion." - Ted Fischer

    Aha! There's the turn I missed. One-off income boosts due to IRA conversions that penalize you for life in the cost of medical care. Got it. Thanks for pointing that out. Seems our government supplied medical care has hidden tax on the back end as well.

    I'm glad I converted most of my IRA to Roth already, and have another 10 years to convert what little remains in my 401k. My plan would be to have no assets in a regular IRA at age 64, only in a Roth. That way any medicare 'hit' would be due to having a recurring annual income which exceeds the threshold, at a percentage cost much lower than what I'm paying now.
    Dec 3, 2015. 05:36 AM | Likes Like |Link to Comment
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