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Rob Feinblatt is an individual investor.
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  • RNO could be a coal gem for MLP investors
     Reading presentation of this recent MLP IPO in coal from Raymond James conference.

    first off, the name seems off peoples radar screens versus OXF or NRP which have good fundamentals but less DCF coverage and some hair on them.

    RNO projected 100m ebitda for sept 2011 annual with 77% of coal contracted out for the yr leaving some upside to numbers i would think given coal prices have gone up alot.  also gives them room to contract strong 2012 rates.

    DCF coverage is a huge 1.7x for minimum distribution of $1.78 per yr.  they have expansion capex of 30m roughly they think which should add to future growth but also will be financed with proceeds from IPO and/or they have very lower debt to ebitda of 0.6x it says.  

    the stock is $23.50 or so, so 7.50% yield but would expect during 2011 them to normalize higher their distribution levels given 1.7x coverage is way too high even if doing expansion capex (which can be mix debt and equity down the road in 2012 and fwd).

    oxf and nrp with much lesser coverage ratios are around 7% yield.

    i think this RNO catches a move to high 20s in the new yr is my investment thesis and we can OWN for a long time and see higher distributions
    Tags: RNO, WLB, NRP, ARLP, coal, mlp
    Dec 31 10:57 AM | Link | Comment!
  • Muni's are the place to BE
    Tags: AYN, BFZ, MYN, VTN, NRK, BNY, Muni bonds
    Dec 22 6:33 PM | Link | 2 Comments
  • NMM skeptical counter piece
     Stanislav Oleynikov wrote a reasonable piece on NMM this weekend.  While the arguments were not new or different than others have argued in the past, it does have some flaws.  

    First, and most important, he uses 2013-2014 charter prices of $15,000 for panamax vessels.  As recently as October, spot market charter prices were $24,000 per day which equals the current 10 average panamax rates NMM is earning.

    As recently as November, Diana Shipping signed a 35 month charter for a Panamax at $19,500 so far better than a draconian $15,000 assumption.

    The baltic dry index is volatile to say the least, so predicting where it will be in 2-3 yrs is beyond impossible.  The global economies are bound to show accelerated growth during the next few yrs which should increase global trade and also will support the scrapping of older vessels.

    NMM gets credit for not taking on vessels without long term charters and those that are accretive to cash flow.  They do not have any charters expiring until the 2H of 2012 so you have quite a bit of time to ponder where charter rates will be in 2013-2014.  

    The argument that NMM NAV is too high relative to those companies who arent paying dividends or locked in good charters is the same argument bears use on MLPs who have smartly hedged out commodity prices for 2-3 yrs ahead.  The best companies like LINE keep rolling out hedges, doing accretive acquisitions and increasing their value while the unhedged companies see massive quarterly volatility.  

    NMM you are paying for steady cash flow, dividends, visibility thru 2012 and a rebound in BDIC.  Profitable long term drop downs from NM only add to that visibility.

    Lastly, the coverage ratio is left out of his piece.  The company is showing a coverage ratio (amount of cash flow relative to distributions paying out) of 2x as per their presentations.  This surplus means the company is more than adequately reserved for lower rates if they occur.  

    The real concern should be owning BALT and others who panic lock in lower rates or have to manage their businesses with weak cash flows during these periods and have less financial flexibility.

    Net is he wrote a thoughtful piece but it has flaws.

    Tags: NMM
    Dec 13 9:02 AM | Link | 5 Comments
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