weiwentg

Obamacare: Affordable Private Insurance Is Already Available

Mark,
This AHIP research piece is well done (unlike the one they asked PwC to do). However, it tells us nothing about how comprehensive the individual policies were. It also tells us nothing about how many people were denied policies due to health status.
As many as 25 million people are underinsured, according to the Commonwealth Fund. They define underinsured as spending over 10% of family income in premiums or out of pocket payments (or 5% if they were poor), or as having a deductible equal to 5% or more of family income. A lot of the individual insurance policies being sold today will leave you underinsured. A lot of them will vary in what conditions they cover; for example, a study by the Center for American Progress found that even among Bronze tier plans in the Massachusetts insurance exchange, policies differed a lot in how much of expected expenses they covered for breast cancer or diabetes. Consumers should not have to have that type of surprise.
I'm not certain how you're defining 'Obamacare'. I have to wonder if you're using it as a scare word. In any case, we definitely need the health insurance market reforms, including giving up health status rating, guaranteed issue, a mandate and subsidies in order to get people insured. I think we could get the system reformed without a public plan, although I would prefer one.

Betting on Natural Gas, Part II: Investing Ideas

Under movers, there are also the pipeline MLPs. My favorites right now are Energy Transfer Partners and its GP (ETP and ETE) and Enterprise GP Holdings (EPE).

Kinder Morgan's Dividend Payout Rate Is Unsustainable

Paul, you've already been excoriated for your confusing earnings/distributable cash flow for MLPs. So, I'll leave that bit alone. I will say, though, that KMP has been issuing a lot of units to fund acquisitions (all MLPs must issue units to generate funds, since they can't retain earnings).

This by itself isn't a problem. However, the general partner (which used to be publicly traded under the ticker KMI but was bought out by private equity) is currently entitled to 50% of the incremental cash flows distributed by the limited partner. This is known as being in the high splits; there are several lower tiers to incentivize the GP (which manages the pipeline) to raise distributions as fast as possible. However, when the LP issues units, the LP has to raise its distributions, and again, the GP gets 50% of the incremental distributions.

I think KMP's assets are very stable and long-lived, and that they'll be able to maintain their distribution. However, I expect distribution growth to tail off. They won't be able to sustain their past growth rates.

Berkshire Decreases Moody's Stake: Smart Investing or Payback?

I don't buy the conspiracy theories. Buffett said much earlier in the crisis that Moody's intrinsic value had declined, perhaps substantially. I only wonder why he didn't trim his position earlier.

Procter & Gamble: A Valuation Opportunity

Good luck shorting this one! P&G sells necessities, it manages its brands very well, and it's in strong financial health. P&G isn't going to go away.

It's also not a very volatile stock. I'm not experienced with shorting, so I question whether you would make more than your cost to short the shares.

Lastly, P&G does not exhibit the symptoms of too big too succeed. The business lines share common themes. The company is managing its brands well and isn't overreaching. Of course P&G is too big to be the next hot growth stock - but that's no reason to short the shares.

Realty Income: Excellent Dividend Growth REIT

I know less about NNN, but I believe they structure their leases the same way. Realty Income uses a triple net lease, which leaves the tenant responsible for all property costs including taxes - this essentially puts all the uncertainty on the tenant and leaves far less for the REIT. Anyway, Realty Income has the best record for consistency. I'm long O and would add under $22.


On Jun 30 10:57 AM Lightway wrote:

> The NNN chart looks similar to O's:
>
> www.buyupside.com/divi...;interval=tenyears&...

Nine Value Companies to Watch

it's interesting to note that Waters and IMS Health are in fact healthcare-related companies. Waters produces mass spectrometers - capital goods for pharma companies. IMS collects pharmacy benefit info.

Sysco More Attractive than Cisco

over the last few years Sysco has underperformed because blue chips in general have underperformed. in contrast, the lower-quality stocks have outperformed. I just bought Sysco myself.

Microsoft Squandering Cash on a Meaningless Product

Remember the peanut butter memo at Yahoo? The same applies to Microsoft. They're wasting a lot of money on non-core products. I'd like Microsoft otherwise but I'm staying away.

Buffett: Still Misunderstood After All These Years

He was criticizing hedgies for taking risks with OPM. They basically dupe others into investing and take huge fees whether or not they actually make money. In contrast, Berkshire is investing its own money, earned from float. Not quite the same as OPM.

Healthcare Reform: Industry Backpedals Fast

By my reading of the article, it sounds like some folks in the industry heard the Pres say that they'd pledged to cut health care costs by 1.5%. He did not. He said they'd pledged to cut the growth -rate- by 1.5% - and it looks like AHA agrees this is what they actually said.

I should note that CMS estimates a 6.8% annual growth rate going forward, so this means a 5.3% growth rate. That's still faster than GDP, which still means that we'll be increasingly unable to afford health care.

MLPs in Q2: As Strong as Q1?

I think Avi was more or less on the money - the weaker, more leveraged MLPs may have to cut distributions like XTEX did. KMP's distributable cash flow dipped slightly and is now pretty near their actual distribution, so I wouldn't look for them to raise their payout this year.

However, I think the stronger MLPs, like EPD, ETE, TPP and KMP are good investments. They're all but certain to make it through the credit crisis and pay sustainable distributions. I think the market is waking up to MLPs.

Master Limited Partnerships: An Island of Stability for Dividend Investors

For GPs, my favorite is probably Enterprise GP Holdings (EPE). They hold GP stakes in EPD, ETE and TPP.


On Apr 07 03:28 PM thinking ahead wrote:

> A tip for fellow MLP holders: once cashflows reach certain thresholds,
> amounts diverted to the GP increase. These are called incentive distribution
> rights (IRD's), and they usually top out at tier 3 - 50%, after 15%
> and 25% steps. Most of the more established MLP's have already reached
> the top 50% IDR level (e.g. KMP, ETP, OKS). EPD is an example of
> a MLP that has a lower IDR threshold - 25% maximum.
>
> Once MLP's reach tier 3, the distribution growth typically slows
> - not stops, just slows - because more of the growth is being sent
> to the GP. It's all a way to incentivize the GP to do a good job
> for the MLP unit holders.
>
> One way to take advantage of this is to buy the GP's. But there are
> far fewer available, because these are the most profitable parts
> of the partnership structure and the smart guys like Kinder and Dan
> Duncan and Lowes like to keep the GP slot for themselves. But there
> are some available. One that has reached the 50% IDR limelight is
> ETE. ETE is the GP for well known ETP. If ETE follows the past pattern
> it should start to boost dividends significantly, while ETP grows
> somewhat slower that in the past. I've left some detail out to keep
> this post short, so do your reading. Disclosure: I own both ETP and
> ETE, along with KMP,BWP and EPD.
>

Even Warren Buffett Has 'Issues'

The comment above is a little harsh, but the fact is that none of the downgrades of Berkshire have anything to do with Buffett's investing acumen. He's still good. In Berkshire, he's put together an insurance conglomerate that is still going strong. I don't think his equity investments did markedly worse than the S&P and they're only a portion of Berkshire's holdings.

Berkshire Hathaway: Climate Change Impacts Insurers

Under Obama's budget proposal, most of the funds from permit auctions are rebated to consumers through the making work pay tax credit. Under these circumstances, regulators would be more inclined to allow reasonable rate increases.

If I recall correctly, Berkshire's annual report noted that Midamerican had made significant investments in wind energy. They will raise their rates less than other utilities who have not made alternative energy investments.