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Atlas Resource Partners, L.P. Message Board

  • lessbs lessbs Aug 15, 2013 1:04 PM Flag

    Cohen factor

    Since buying a partial position in ARP, it has steadily gone down in price. For those that have been long term investors in MLPs, you know that you are at the mercy of your "partner". There are quite a few cases where the small MLP investor gets ravaged at the expense of the billionaire with the major ownership. Because of the Cohen history, I can't help but worry about the possibility of this with ARP.

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    • ARP will be grown. Up until the last acquisition they were doing very well IMO.

      Its also my opinion that you should invest in ARP for the yield - not for capital gains. My reasoning is twofold. One, There is no doubt that ATLS has an interest in seeing ARP grow as much as possible. Two, you get the most benefits from an MLP by holding basically forever. If you own for three years - collect say $7 in distributions and sell at say $32, you'll be shocked how much you will owe in taxes.

      The problem previously was simple. Ed Cohen allowed his son to play with the toys. That's what lead to the disaster with the hedges and he has no business being involved in any way with the company. Unfortunately he still sits on the board. The only good thing was that they were forced to bring in Dubay and he has set the house in order at APL.

      Ed Cohen is a master at financial engineering - raising money and the like. Where he gets into trouble is apparent in the last acquisition. You don't acquire mature assets on an assumption that a commodity is increasing in price - you just don't do that. We should have been able to acquire those assets at a discount. There is a lot of mature assets being marketed by companies looking to focus cash on other plays. For some reason, we basically overpaid. It might look ok on a spreadsheet and we can talk about lowering overhead per unit of production - but it was simply a bad buy. A back of the envelope calculation at today's NG price gets you to about $150 million less than what we paid. Throw on top, the fact that's its coal methane and we previously did zero of that and you just have to wonder....

      I'd focus more of your efforts at trying to determine what type of leader the ARP President is - and can he lead an increasingly diverse organization successfully.

      For what its worth - at these prices (especially if you can get units sub $20 - I think ARP is very attractive if you like yield as part of your investment thesis.

    • about 10 years ago I used to own APL and the good news was often drained by more secondary offerings as it grew and the same thing is possible with ARP and that may be why ATLS has outperformed so far. That said I own more ARP as I think it is very undervalued. Buy some ATLS too if you want to be aligned with Ed.

    • The Cohens' are so levered to these entities that we are aligned.
      We have so much upside from here...let the rapidly increasing DCF
      drive the stock price, even with an assumed 11% yield. A $2.75 distribution
      for 2014 gets us a $25 price.

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