After buying some shares on July 13th @ 48.79, am now down over $7.00 a share . Sure this stock pays a nice dividend, but how long will it be before it ever sees $48 and change again?
I bought this as a long term investment,.
Any comments, ideas, would be appreciated..
House of Pain,
If you look at a multi-year chart of SPH, you will see the stock dips in early December. It looks like it starts rising toward the end of December and continues into January.
Let's hope 2008 isn't like 2005 where it rose a bit in the beginning of the year and then fell throughout the year before beginning a late December rally.
I suppose this pattern is due to the fundamentals of the business where they don't sell much propane just before winter starts.
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).
this is a great company and will come back as soon as the market turns around. the fourth quarter is always their weakest. you will be a winner. This is the time to buy more. keep an eye on the volume.
I bought this one on 5/24 @ $48.05
and after some pain again on 11/20 @ $42.34.
If the pain continues I may be in again in Jan.
My point being that when the pain ends I expect to
be dancing the JIG!!!!!
"How they have been doing it" for the past few years is through operating efficiently and eliminating unprofitable customers. The concept of newcomers breaking into this industry is nothing new. The old industry model, which is still being followed by some of the majors is to continually acquire the little guys to maintain or replace lost volumes. Sooner or later, real organic growth is going to be necessary to remain a winner in this industry. SPH appears to be best positioned among the majors because of their focus on operating more efficiently rather than just following the old model. Their lack of small acquisitions over the past few years tells me that they "get it", which is half the battle. Execution will be the key going forward.
The company is pricing themselves out of business. Lucky for them they have many inground tanks. New housing has fallen off a cliff so new tank installs must be down. Warm temps are really going to hurt the current Q and full year.