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Vanguard Natural Resources, LLC Message Board

  • lessbs lessbs Nov 21, 2008 12:09 PM Flag

    RBC presentation

    Several key points I took away from the panel were that distributions will not go up for some time for most MLP's, VNR will make it's distribution payments for the next couple of years even if energy prices continue to go down, and if MLP share prices stay at these levels or continue to decline, you will start to see MLP's taken private (point was not made by VNR). The last point is a little scary since after hanging in and riding this sector down, you may then be taken out at a level where you lose a lot of money.

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    • I agree with you about the fact that many managers have done well by unit holdrs. I think the issue of buyout is of greater concern for smaller mlps such as vnr. There are two different possibilities. The first is that a larger mlp or operating company could buy them out .The second is that the gp or management could buy out the company. In either case I am not sure if they would sustain their tax free status which might be important. Howeer, at a yield of nearly 30% the market is saying something about the risks involed in holding these assets.

    • Don't get me wrong, I don't want to see MLPs going private, but the market is indeed throwing the baby out with the bath water on many of them.....the one thing that is working in favor of the unitholders is that capital is very tight making an LBO difficult. Your comment about self serving is true for some, but not all MLP managers. Many of the MLPs have long track records of rewarding unitholders with steady distributions for years. I think it is unfair to blame management teams for the global crisis. Virtually everything is down at least 20% to 50% over the past 18 months.

    • Sorry, the last message posted before I was finished. BGH had a high of about $40 in '07 and they were trying to take it private after increasing their offer from $17 to $17.50, only 20% above the deflated price at the time. Maybe they were only trying to say the price was way too low and thought the offer would be rejected, but it was really a disturbing offer. It raises a pretty big red flag over this whole space.

      I have way too much of my wealth invested in the energy MLPs where historically the major owners are known for self-serving greed, and am kicking myself for doing it.

    • what does MLP stand for? just started watching this energy trust never been invested. thanks

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