KMI showed a temporary distribution cut for 2 years is the right thing to do in a down environment.
MLPs operate on the edge when times are good, this is the model, they are cash cows but pay out that cash. But when things turn down the capital markets freeze.
Taking two years to use that cash to de-lever and improve the balance sheet is rewarded by the market. KMI cut but are trading around where they were before the cut. The reason is because the market knows KMI will be able to fully restore the distribution, and increase it in 2 years time. That is what the market is valuing now.
ETE is in a bind though because a cut at ETP causes them to blow the covenants, but banks should be OK with this move as it de-risks the whole group.
The reason ETP is a great buy now is unlike KMI which cut 75%, ETP can not cut 75% because it would starve ETE, so ETP will probably cut 25% for 2 years and ETE 100% for 2 years. Both will be restored and then some in 2018.
What we are seeing is firms like EPD have the better model, they run at 1.3x coverage, not 1.0x, and are able to easily absorb downturns with no problem.
Mr Market is saying that a distribution cut is inevitable. Look at the performance of KMI since they eliminated the distribution. Kelcey can read the tea leaves. Time to focus on improving the balance sheet, especially with material new debt post WMB merger close.
Serviced, yes. But when?
Methinks you listened to a different CC than I did. They acknowledged that MLP were issuing shares, but for ETP/ETE the possibility was a remote one.
The CC I heard said all partnerships would be issuing additional shares to raise capital. ETE has $18 billion in debt and ETP has $28 billion in debt. These debts have to be serviced.
Problems are several. Debt and the price of oil may be the two biggest issues. Oil price is outside of ETE/ETP's control. ETP has over $28 billion in debt and ETE has over $18 billion in debt. ETE has deferred for another year ETP paying the IDRs which adversely affects the revenue of ETE and its ability to pay interest on debt. In today's conference call, it was acknowledged that in the future all partnerships would be issuing additional shares/units to raise capital.
very good call , yes I did listen to the call, back to buying more hope it sells off to below 20. so I can get more. lets see, no shareholder unit payout [div] cut, no need for more stock issue, large earning increase coming, darn good outlook for etp, this is why mr. big bought over 5 million shares most likely at 32.-35. in fourth quarter. yep sit back collect my 4.22 clams, heck this is going to be a growth stock. ps all people should do there own info on any stock and make your own mind up on what to spend your cash on.
You, and hundreds of institutions on the planet will happily wait a year or so for the market to clear while being paid 15% to do it. Shorts talk like the stock would be trading here if there was no risk. But the risk/reward strongly leans to the upside IMO. I already have the position I want, but I will definitely add to it if the market is dumb enough to sell it down. This is a complete gift for those of us moving our portfolios into more income-generating holdings.
if you back out that 283 million tax benefit then DCF is .75 which is not good...... every quarter it seems ETP is juggling numbers..... I know ETE is pulling the strings and will whatever to keep the distribution whole....but in the meantime ETP stuck below 30 unless oil and nat gas rally.....
I listened to the call. Participants emphasized that ETE would do what is necessary to held ETP maintain its distribution through mid 2017 at which time ETP's growth will be substantially higher based on new projects coming on line. They also stated they see no events in 2016 that would necessitate a cut in ETP distributions. They were fairly non-committal on the growth of this distribution in 2016, but I can live with a $4.22 annual double digit distribution for all of 2016.
Doing quite well actually. Bought on the 11th and sold on the 17th. Wife wanted a new deck and now I don't have to spend the summer building it myself!! Looking for another good run when the price is right.
Of course there was that knee-jerk reaction to sell based on the earnings miss but this is an LP structured to MAXIMIZE DEPRECIATION and MINIMIZE EARNINGS to kick tax liability way down the road. Distributable Cash Flow has this 15%+ yield nice and safe. Any short who didn't cover this AM won't see such an opportunity again. Let the market start looking deeper into the #'s and it is going to like what it sees.
None of your recent history makes sense...closed your position on 2/1 then somehow you have another position to close out on 2/6....Typically when someone closes out a trade, it is what is know as 'closed' and no longer money at risk. You must be a brilliant trader, I wish I had your skills.
----here is your trade history-----
put my short back on @ 30.....closed it with a avg share of 26.80
will close 50% of my short @ 25
On a close below 1812..I would consider re-opening my short
closed short out @ 18.95 average share gain..8.00