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  • Overvalued Enterprise Products Partners Will Lag Peers For The Next Several Years [View article]
    Tim,

    Thanks for the article. It did made me think a bit more about my EPD position. I've owned it for some time and feel that it is still a hold. I don't agree with others who think they will raise their distributions to a level that reduces their DCF to something that is closer in line with the sector. Kinder is doing his deal because he was stretched and watched his cost of capital go up. Raising further capital to do meaningful deals would have been painful for existing Kinder unit and shareholder.

    EPD has a low cost of capital and will want to retain that. there seems to be plenty of opportunity still in midstream and I'm sure EPD will be doing big deals in the future to take advantage of those opportunities. Their pristine balance sheet will allow them to do those deals in an accretive way.

    Not adding more to this position, but happy to hold. It may underperform the sector for a while but the cost of selling means I would need a really compelling reason to get out. PAA has some good distribution growth ahead of it and a strong balance sheet. Also some nice exposure to the Permian Basin which offers some potential upside from oil/ condensate exports. New MLP money might go there.

    Thanks for the article.
    Sep 18 02:46 PM | Likes Like |Link to Comment
  • Could Timmy's play in the U.S.? [View news story]
    There were a number of Tim Horton's in my neck of the woods, which is Rhode Island and Mass, but they seem to have retreated. Tough to compete in DNKN's backyard. In fact two THI stores that closed are now DNKN stores. The Burger King deal seems really all about taxes. Burger King will still be paying taxes in the US, where they make most of their money. But they want to expand more internationally and Canada treats overseas profits from from companies domiciled in Canada differently than the US does. I.e. Burger King will be able to repatriate profits from overseas and use those profits to pay dividends, pay down debt, buyback shares or invest elsewhere.
    Aug 28 11:40 AM | Likes Like |Link to Comment
  • Dunkin' Donuts Blames The Economy And The Weather, Huh? [View article]
    The donuts didn't all of the sudden start tasting bad in the first quarter. The taste I'm pretty sure hasn't changed. The coffee hasn't changed either. There are a lot of people who like the place. The lunch food has been growing (though it doesn't do much for me) and I still see lines at the DD's in my neck of the woods. There are a lot of them. I live in Rhode Island.

    There is a large section of the population that would rather not go to a Starbucks and listen to the person in line in front of them ask for a double latte espresso with kale and a shot of whatever. There is definitely a market for what DD offers.

    There is also a market for franchisees that is very strong. DD has one of the best value propositions of major national chains. As a shareholder I am very happy with the 100% franchise model and the very high ROCE and related free cash flow the business generates for shareholders. This supports the share buybacks and the related high debt level.

    I see westward expansion as a great opportunity. To DD California and Nevada are "frontier" markets. It's pretty comforting when you can find growth like they have delivered without having to go to a real frontier market. However, it's possible California bombs for them. That's a risk to longer term growth (that isn't in anybody's model) and to the P/E, but not so much the business model.

    Following this year's poor performance the stock has performed in line with the market since purchased in 12/2012. If next quarter's earnings do not better last quarter's weak results (weak is all relative and vs expectations of course) when they generated 1.8% US same store sales, 4.6% overall sales growth and 14% EPS growth, then I will have to rethink the story.

    I'm left right now having to accept management's statement that the harsh New England weather (multiple work and school snow days), which I experienced was the cause of the miss. Management has been straight with shareholders to date and personal observation is supportive. The valuation is also now a bit cheaper than it was a few months ago.
    Aug 25 04:25 PM | 3 Likes Like |Link to Comment
  • Kinder Morgan: A Good Example Of Why Investors Should Never Pay Attention To Wall Street Analysts [View article]
    If you own MLPs in an IRA you must pay tax on the part of the income that is considered unrelated business income tax” (UBIT). Under the UBIT rules, tax-exempt organizations and retirement accounts must pay tax on their “unrelated business taxable income” (UBTI). You can find your UBTI in the MLP's K-1. The tax on UBIT I believe is 39%. This is why MLPs are not considered appropriate for an IRA. There is nothing wrong with holding them in an IRA but you will have to pay the UBTI. The ETN AMJ is a way to get around this.
    Aug 22 09:35 AM | 1 Like Like |Link to Comment
  • Kinder Morgan: A Good Example Of Why Investors Should Never Pay Attention To Wall Street Analysts [View article]
    Many of the KMI/KMP/KMR bulls are patting themselves on the back and declaring that Wall Street analyst got it wrong. If you go back to about the time of the EPB purchase the Kinder complex, even after the recent jump in the share, have still underperformed the Alerion MLP index.

    It will be interesting to see how the new structure plays out. Some significant tax bills we have to be paid by long term holders and I wonder how this will impact the entire MLP universe. MLPs offer tax deferral not tax elimination. Does a better understanding of this by unit holders weigh on valuation?
    Aug 22 08:52 AM | Likes Like |Link to Comment
  • Kinder Morgan: Strap Yourselves In And Prepare For Lift-Off [View article]
    David, thanks for the article. Just curious if you know what percentage of KMP's earnings would come from the Trans Mountain pipeline in say three years if it is completed by then. Also, Canadian oil is expensive to dig out of the ground. Do you know at what price it becomes uneconomic?

    Thanks
    Jun 11 12:03 PM | Likes Like |Link to Comment
  • Kinder Morgan: The Worm Has Definitely Turned [View article]
    Past performance is no guarantee. The bulls on the Kinder companies look at the low valuations and the Richard Kinder's track record over more than a decade. But looking forward, I believe the Kinder group carries too much leverage and is somewhat weighed down by a rising cost of capital. The MLP units and the C corp are cheap based on yield and deserve a bounce, or maybe they have already experienced it, but I believe there are MLPs with better growth prospects out there. PAA, MWE, EPD, and MMP come to mind.
    Jun 4 04:59 PM | Likes Like |Link to Comment
  • Kinder Morgan: How Feasible Is A GP Buyout? [View article]
    I know everybody thinks Kinder is Godlike and can do no wrong. But it appears to me that by loading the MLPs and GP with so much debt he has backed himself into a corner. The MLPs are trading at low valuations and have as a result high cost of capital. Meaningful expansion capex in the future will require accessing either debt market or issuing more units and the cost will be high relative to what EPD and MMP pay. Buffet has made mistakes, as many other managers who have created wealth for their investors in the past. Blind faith in Richard Kinder's ability to generate high future returns may be misplaced.
    May 29 12:12 PM | 4 Likes Like |Link to Comment
  • Kinder Morgan: The Good, The Bad And The Ugly Truth [View article]
    1GreatCFA, It's my bet that Congress wont' touch the MLP structure as long as it does not leak into other industries. Firstly, Congress can't seem to do anything at the moment, and if the Republicans retain control of the House I think MLPs are safe. But its questionable whether Democrats would challenge an industry that has been creating jobs in a lot of democratically controlled states and districts. Even Obama has been talking up our domestic energy industry and MLPs have been vital players in its growth.

    Canada had royalty trusts, which were similar to our MLPs in terms of tax avoidance/ deference. Originally they were meant to support the build out of energy infrastructure but eventually other companies were using the structure. I owned for a couple of years Groupo Aeroplan which was a royalty trust that held Air Canada's frequent flyer program (I didn't make any money on this one). And at one point there was talk of turning the BCE, the telecom company into a royalty trust. That woke up the politicians and eventually the structure was eliminated.

    Cedar Fair (FUN) is an Ohio based amusement park operator that is an MLP and I'm sure there are a few other non energy MLPs out there. My guess is if larger companies outside of the energy area start going in that direction then Congress may act. But I am also assuming that they will either leave alone energy companies, or grandfather existing energy MLPs.

    It should also be pointed out that you pay taxes when you sell an MLP on the capital gain, and that the basis is adjusted down to reflect all of the distributions you have received over the lifetime of your holding. So a fairly large cap gains tax will be paid for most owner of MLPs who have held them for a long time.
    May 21 02:44 PM | 1 Like Like |Link to Comment
  • Kinder Morgan: The Good, The Bad And The Ugly Truth [View article]
    It's horses for course whether you buy the GP or the MLP. Each investment needs to stand on its own merit and IDRs are a part of the analysis whether buying the MLP or the GP. However, the controversy surrounding the Kinder group of companies, which has been reflected in their under-performance, is not so much about the rights or wrongs of IDRs but the ever increasing amounts of leverage that the Kinder GP and the MLPs have taken on. Kinder may have created a lot of value over the years for investors but that seems to be changing.

    MLPs like EPD and MMP have outperformed the Kinder group because they have been better managers, not just because they do not have pay have GP siphoning off cash flow. Both EPD and MMP are now able to fund major investments without having to go to the capital markets via debt or unit issuance while still paying out large distributions to shareholders, and increasing those distributions annually at a rate that is faster than what the Kinder group can manage.

    Further, should either EPD or MMP decide they need to raise capital they will be able to do it at a much more cheaply and dilute unit holders less than KMI, KMP or KMR could.

    Bulls on the Kinder group are focused on the dividend yield and historical performance. There is value in the group but I would rather own MMP and EPD which have lower yields but are growing distributions more rapidly and have greater flexibility because of their strong balance sheets and related lower cost of capital.
    May 21 02:19 PM | 1 Like Like |Link to Comment
  • ETF portfolio manager tied to selloff [View news story]
    Good Harbor seems to be like your average hedge fund these days - playing the momentum trade, but always late. According to this post they are selling small cap ETF's and buying Treasury ETF's. Maybe a little late? Does anybody know what their performance has been like?
    May 20 04:48 PM | Likes Like |Link to Comment
  • CenturyLink counting on data centers, network to take on Amazon [View news story]
    Don't really care about AMZN as a stock, (too expensive, and price does matter, free cash flow is minuscule) but I hope CTL is beginning to think about getting out of the cloud business. Too much competition. They should let the big boys battle it out and focus on the better returns they can generate by investing in their core business.
    May 7 12:38 PM | Likes Like |Link to Comment
  • Mondelēz International, Inc. misses by $0.02, misses on revenue [View news story]
    The board of directors should do something, but since se appointed them before the split with Kraft they will be slow to act. I bought this stock soon after they spun out of Kraft based mostly on the quality of the assets, the merging market exposure, and the presumed ability of management to increase the margins. When I listened to MDLZ's first results conference call as a publically traded company I was worried. As Sittingcrow points out above, she is full of excuses. And every conference call since has been the same. Warren Buffett wanted nothing to do with her, and actively tried to stop some of her strategic moves, but to no avail. Having heard her present I can imagine how painful Buffet found his conversations with her. I don't believe he surrounds himself with people who constantly make excuses for their failures. I still own the stock and still hoping for the original investment thesis to play out. Patience is wearing thin. New management soon please.
    Feb 12 08:17 PM | 1 Like Like |Link to Comment
  • FCC wants carriers to allow unlocking, pushing ahead with H-Block auction [View news story]
    What is the timing on Dish's need to use it or lose it?
    Nov 17 06:24 PM | Likes Like |Link to Comment
  • More from McDonald's Investor Meeting [View news story]
    DNKN does it and it seems to work for them, in New England anyway.
    Nov 14 05:26 PM | Likes Like |Link to Comment
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