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Suburban Propane Partners, L.P. Message Board

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  • lner2512 lner2512 Dec 17, 2007 9:47 PM Flag

    House of pain W/ Suburban Propane

    If you're truly in it for the long term, don't worry about the units' price. Just focus on the income stream and the fundamentals. The fundamentals are improving, I believe, so a price decline is a buying opportunity for you.

    Why did the price decline? I think it can be traced to the hedgies, who owned more MLPs than most people realized, at least in July. When things fell apart in August, they were forced to unwind a lot of positions. Many of their investments weren't very marketable, so they sold what they could, including MLPs like SPH. The whole basket of MLPs tanked in August and has yet to fully recover. I'm looking forward to January for some good news.

    I own a lot of SPH and I'm not selling. They sold a major facility in October, then leased it back, meaning they now have a bundle which must be reinvested, used to pay down debt or paid out as distributions before next September. Meanwhile, the business is improving, so just be patient.

    • Competition for propane is increasing with the likes of Combined Energy Services (CES) and HECO which I believe is a new venture from Region Oil. IMO, Suburban just has to be losing customers. I have a funny feeling they'll use their cash to swallow up some of the smaller companies. That may be the only way they can increase their customer base. Maybe you buy now for a quick trade, but with the dollar falling, I wouldn't buy long term until late Summer.

      Good luck all!

    • I bought SPH @ $33.50 in 2004. At that time the distribution was $2.45. It's now $3.00, so I'm earning 8.95%, until the next increase.
      LLPs like this are not trading stocks. Almost all the profit is distributed. When the LLP wants to expand, it issues more Units. I'm not against short-term speculation, but SPH et al. isn't (IMHO)the place to do it (successfully).

 
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