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Inergy, L.P. Message Board

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  • 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.

    • you have allot of insight on the stock. With this drop have you added to your position?

 

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