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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.

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    • 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?

      • 3 Replies to jill5037
      • 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.

        Jim

      • I have not.

 

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