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Inergy, L.P. Message Board

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  • lner2512 lner2512 May 1, 2012 1:49 PM Flag

    what was the point?

    Yes, not all those SA articles actually find that elusive Alpha! Still, what is kept at NRGY seems interesting, but probably more comparable with CHKM than typical G&P's, The management team certainly keeps their feet moving--buy out the GP, becomes a GP by spinning out NRGM, sell their main business. The nice part is that with the new distribution set, a major uncertainty is gone. I may get back in.

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    • I think CHKM is a more typical G&P. PNG and NKA may be more comparable nat gas storage MLPs. NKA yields over 10% and PNG around 7.6%.

      Keep in mind that the NRGY share price will probably decline about $3 (or more) after the propane sale close to reflect the disposition of those assets and the lower distribution. Now that they've done their deals, I think the market is going to ask them to show their growth before awarding them with a premium valuation.

      • 1 Reply to marklibera
      • I'm looking for a decline too, but it will be offset by the value of the SPH shares received as part of the sale. NRGY today is roughly $19; deduct about $4 in SPH stock you'll receive and your basis--and the market price-- is about $15. New distribution level is $1.50 so yield is similar to other storage MLPs.

        Management's challenge will be to avoid another distribution cut. They own a lot of shares and they aren't afraid to move their feet, so I think they'll meet that challenge. And then there's NRGM...