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StoneMor Partners L.P. Message Board

  • roninseawa roninseawa Sep 17, 2008 6:34 PM Flag

    Close to 14% for a secure investment

    Even if we are heading into a depression, where else can you invest where there is an inelastic demand for your product? You may try to put off dieing until the economy improves, but that's hard to do. The only question is when to buy additional units and whether to margin to add even more.

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    • Now over 20% yield--where is the low price/possible high yield going to be when the slide is over (assuming it stays above 0).

      • 1 Reply to lessbs
      • Even with negative EPS, you can still pay out huge distributions. EPS factors in many non-cash charges which don't actually reflect cash flow. Basic finance...

        For an example, look at pipeline companies (NGLS, BWP, EVEP). Most have extremely negative earnings, but great cash flow, and therefore pay out great distributions (MLP structure is a distribution, not a dividend).

    • Peopple are still going to die but they don't have to be buried. The family can go the cheaper route and have the body cremated. Cremation is eating into the profits of cemetary operators.

    • Who says this is a secure investment? That 14% is a distribution (a return of capital), not a dividend (return of earnings). How long can they return capital in excess of earnings? They are on pace to distribute 24M this year, while only earning 5M. The stock is dropping like a lead weight because credit markets are tightening and company will not be able to borrow money for distributions indefinitely. The big question is how low will a stock go that doesn't pay a dividend and is earning $.06 a share? Iam thinking about $2-3 a share.

      • 1 Reply to stacibarn
      • The distribution is not a return of capital - the entire distribution last year was fully taxed and classified as UBIT (Unrelated Business Income Tax). If it was return of capital, it would not be taxable. It has been taxable, either as dividends or UBIT since its' inception. It seems to me that if the source of the distribution was from capital, it should show up in the balance sheet. This is not the case.

26.06-0.14(-0.53%)Feb 10 4:02 PMEST