thinking ahead

Global Warming: Investment Implications

It just doesn't matter what we do in this country about Co2, because China and India have already said -- over and over and over -- that they will not impair their economic growth to accomodate a western obsession with climate change, since we had the benefits of the industrial revolution and they didn't. So chill everybody. Our 305MM population carbon footprint just isn't very important.

Master Limited Partnerships for Your Portfolio: Three Key Questions and Answers

Here is a good web site for investors wanting to learn more (you will need to dig around in here a little though - not 100% user friendly).
www.naptp.org/

note that the author's San Francisco Money Show reference is listed as the most recent investor event on this web site. I currently own BWP, LINE, ETP, RGNC and PAA. Sold KMP and EPD for valuation reasons, but still like the stories. Got burned a little in NRP when the coal story went south. My favorite plays now are BWP and PAA which have large nat gas storage capacity and benefit from the Nat gas contango.

Capturing Higher Distribution Growth in MLPs

Some of the stuff in this article looks familiar:

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.

Master Limited Partnerships: An Island of Stability for Dividend Investors

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.