While I agree with much of what you said, particluarly with respect to NRGM, I disagree with your assertion that a distribution cut would be a killer. The funders would view it positively, analysts would view it positively, and it would put the company on a more sustainable path, albeit with a somewhat lower yield. And, of course, the size of the reduction would determine the market's reaction as well. The larger the cut, the more pronounced the reaction would be. But I believe it would be a temporary reaction and an opportunity for smart money to accumulate the stock. Given that the stock is already evidently discounting that possibility to a near certainty, it may already be time to accumulate additional units.
In my experience, dividend cuts trigger selling. If the distribution is cut, the stock will likely decline until it yiields what it was yielding before the distribution cut. I have seen this happen numerous times (recently with a mortgage REIT). The conundrum is if they cut just a little, there will be speculation that a larger cut is needed. If they cut a lot, say to a yield of 8%, then people sell and switch to something earning an equivalent yield but with a better chance of growing.
Never sure if this message was directed at me, but as for myself i started a position at 23.65, but sold most of the units two days ago after the call to investor relations. I am waiting to see how cc goes. The warm weather high propane rates, asset sale/ipo and under performing areas of business, and new facilities yet to come on line - i will wait and see at this point what the company has to say in a few weeks lou
I have been adding small amounts to my position over the last month. I expect the distribution to be maintained based on the last CC. I expect distribution increases to resume in late 2013 or 2014 as additional midstream assets come on line and start generating cash flow. At that point I expect the yield to drop to 8-9% as the unit price recovers. As others have implied on this board, my strategy is not without risk, which is why my unit purchases have been small. GLTA.