CEP has indeed been one of the last to show any appreciation. Until these guys can increase the distribution, why would investors want to buy. If they are makin accretive acquisitions, then the distribution should be raised. If it is not raised, then the accretion is making up for short fall in other assets that the company owns. In essence, the Woodford deal is making up for a short fall in some other properties (Cherokee Basin or Black Warrior Basin). They also seem to like to make large increases and then plateau. I would rather see them raise the distribution by .025/Q for 4 Q's in a row than to see a one time .10/Q increase and then keep it flat for a year and then make another increase. Sure you get more upfront income with the large one time boost, but the slow, gradual increases draw more attention from Wall Street. Investors come to know that they will get an increase, even if it is just .01/Q increase, it will be more than the Quarter before. This seems insignificant, but in an illiquid MLP market, anything that sets you apart from your competitors can be an edge (in this case, a better following can lead to a better equity price which lowers their cost of capital when they issue equity to pay for acquisitions). With a high equity price, it makes it harder for CEP to make accretive acqusitions, which means less increase on the distribution, which means slower growth, which drives the price down and the cycle feeds on itself. It works the other way as well. Look at Atlas (ATN). With a yield of around 5%, they can issue equity and buy properties at 5x or 6x ebitda (16% to 18% return) and pocket the spread (after maintenance capex and interest expense). As long as their equity cost stays low, they can grow as much as they want.
Your analysis is compelling and I noticed the flat growth. However, IMHO, I purchased CEP on the basis it has the lowest D/E in the MLP universe, attractive yield and it has a projected 2008 EBITDA of $100M. EBITDA/shares gives about a factor of 5 which is inline with KMP.
You did extremely well buying today. Congratulations. It will be worth the wait for the recovery in price, and a 12.6% distribution is a nice return while you wait. Over the next several years, the total annual return out to exceed 20%, and perhaps 25%, from today's purchase. Not bad for a relatively conservative investment.