zorro6204

MLPs in Good Shape, Despite Credit Crisis

A loss he's trying to recoup? BBEP hasn't traded at $14 since the fall 2008 crash. Besides, you can argue that $14 is a fair value in relation to its peers, so what do you expect him to do, sell in the $12's?

Encore Energy: Solid High Dividend Energy Limited Partnership

Your conclusions are correct, ENP is one of the more efficient and financially stable MLP's. But using GAAP numbers can be very misleading. Depletion is one reason (for a producer), older properties still producing could be completely written off, whereas earnings from a newly purchased property would be heavily impacted. GAAP earnings can also be heavily distorted by the accounting treatment for derivatives used for hedging.

For comparing MLP's, the appropriate financial metrics are cash flow (distributions and coverage, or dcf), reserve life and net leverage, measured in relation to cash flow for commonality.

MLPs in Good Shape, Despite Credit Crisis

You stated what seems to be a popular misconception concerning distributions by BBEP. This is what they said in the press release:

"As we begin the 2010 planning process, our improved liquidity position will allow us the flexibility to further accelerate capital spending to levels that should enable us to hold production flat and subsequently re-establish distributions when leverage has been reduced to acceptable levels."

First will come the 2010 planning process, then an increase in capex, then a reduction in leverage and then (subsequently) distributions. The way I read that, we're talking the second half of 2010 at the earliest. If the market thinks that's "fairly soon", well . . . fair enough!

It's a good investment, at a fair price, but there are other MLP's paying what BBEP did before suspending that trade in the $16-17 area, LGCY and VNR for example. Logically speaking, even if BBEP did re-establish the distribution in the $2 area for Q3 2010, a cap for the current price should be in the $14-15 area. It closed today at $12.81.

Disclosure: long BBEP, LGCY and VNR.

Will Windows 7 Pass the 'Mom' Test?

The big problem with Windows 7 is that takeup by existing XP users will be very slow (there are no Vista users, right?). In order to upgrade, you have to remove all of your files to external storage, it will not install "over" XP. Not that many people have standalone hard drives big enough, or would be inclined to buy one merely to upgrade. And then there's all the horror show with updating programs . . . blech. I'm not upgrading until it's absolutely necessary, probably around 2015, and I bet a lot of people are in the same boat.

Given how cheap PC's are these days, a fair number of people may upgrade that way, which should be a boon for Dell and HP.

Northwest Natural Gas: Worth Considering

Money is money. I'll take the one that's priced to pay more for the next few years, at least until market prices adjust to yield. The only real difference is taxation, but over time that's immaterial.

In the long run, a corporation that retains more of its cash flow to invest should appreciate more, but these are hardly normal market conditions, the MLP's are priced to yield too high in comparison. Maybe in 2014 an energy corporation would be a better investment, but not now.

Breakouts in Gold and Natural Gas

Sorry, I wish you could edit, it seems you can't post a character string that long. Here's some extracts from that source:

"U.S. spot natural gas prices tumbled at every price point Friday, most for the fifth straight day, with benchmark Henry Hub gas in Louisiana pressured to its lowest level in a month amid expected light weekend industrial demand, mild near-term weather and recent grim economic news."

"Physical gas prices have also been trading at huge discounts to forward futures prices and traded at their widest margin in about three years on Friday."

"Gas for delivery through Monday at Henry Hub fell 59 cents, or 20 percent, to $2.32 per million British thermal units, its lowest level since tumbling to a 7-1/2 year low of $1.83 on Sept 4, according to Reuters data."

Breakouts in Gold and Natural Gas

Wait, I take it back! The November contract is completely disconnected from reality it seems. Actual prices crashed horribly:

hxxp://www1.hymarkets....

Breakouts in Gold and Natural Gas

Well, I must say the following day through me for a loop, I expected the November contract to quickly decay into the $3's. EVEP's CEO expects gas to be in the pennies within weeks due to a shut down in storage. Makes no sense, but the market did reverse.

Northwest Natural Gas: Worth Considering

I don't understand the point of owning a gas oriented security that yields 4%, when there are several well-hedged MLP's yielding nearly three times as much, such as LINE, CPNO, MWE, NGLS, EVEP, VNR, WPZ, etc. These large energy companies are simply over priced in relative terms.

Breakouts in Gold and Natural Gas

Gas breakout?? The chart bump you show was due to the November futures replacing October. Look what happened to those futures today!

Is ConocoPhillips a Potential Multi-Bagger?

Boring, Sidney. There are MLP's like LINE, EVEP, VNR, ENP and LGCY, which are currently priced to yield 12-13%. Due to hedging, the distributions are well covered and secure, and all of these have dry powder to take advantage of properties in weak hands. 4 points doesn't do it for me.

When Recession Becomes the Norm, What Happens to Stocks?

Could be. One thing I decided very early on in the crash was to buy yield only. A stock like Microsoft, which pays virtually nothing, is worth only what someone else will buy it for. But a security that distributes profit, such as a REIT or MLP, will always hold its value in the long run based on the cash flow stream. Besides, what good has that retained cash done for Microsoft's stock price?

Alcoa’s Future: Bright and Shiny or Rusty and Dull?

I don't see the airplane industry as any salvation. There aren't that many planes to begin with, surely the amount of aluminum in the parking lot dwarfs that in planes on the field. And the 787 is a composite plastic plane, it's only 20% aluminum, way less than half the amount used in 777's. Assuming Boeing ever actually builds the thing.

Not Enough Ado About Real Estate Lately

In the real world things are unbelievable at the high end. Next door to me my neighbor just walked on a home he bought for $769K in 2006 for a $540K mortgage. This is three miles from Bill Gates' front door. The other next door neighbors are raccoons, living in a 6K ft McMansion, half built, with roofing felt peeling off in the wind.

Natural Gas: An Energy Resource Whose Time Has Come

I don't dispute your general conclusions, but I'm extremely skeptical regarding the timing. This country does not seem to handle macro issues like this until there's some kind of crisis, and in the case of oil, apparently not even then (it's been four decades since the OPEC gas lines). Boone Pickens added a little momentum to the idea, but perhaps his failed predictions and losses have cost him credibility, and the plan along with it.

There's also the structural problem to consider. If cars are refueled by a home gas line or electrical socket (partially gas generated), then what happens to the hundreds of thousands of gas stations and the associated jobs? It's like making car insurance pay at the pump no fault. Great idea, very efficient, very logical. Forget it, the massive number of people employed in the insurance profession and all their office space being emptied would be too great of an economic shock. There will be great resistance to any kind of systemic change like that.