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Energy Transfer Partners, L.P. Message Board

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  • You cited NS in your remarks.
    Do you have an opinion on it in particular as it is near its 52 week low?

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    • NS bought CITGO's asphalt unit - and I believe [but not certain] it is dependent on Venezuela [or CITGO] for its source post acquisition. And the market does not like a company that is dependent on that flakey dictator Chavez - or maybe the market is like me and does not like even thinking about a political risk that is hard to measure.

      On the other hand, NS is cheap - and the unit price is probably over-punished - significantly over-punished. An MLP who's distribution is up over 13% over the last twelve months should not sell at a 8.73% yield. NS has a distribution/DCF ratio that suggests continued high distribution growth. The consensus DCF estimates that I produce also show good DCF growth for 2008 and 2009 - suggesting good to strong distribution growth.

      Citi writes "NuStar generates 83% of its cash flow from stable midstream assets, while only 17% of the partnership' s cash flows are generated from asphalt refining. Additionally, our estimates allow for a larger than average coverage of 1.25x our 2008 distribution estimate of $3.97/unit."

      Bottom line - the reward [the high yield plus projected distribution growth] more than offsets the political risk. Or at least that what my mind and the stats say. But my gut still does not like it. And there are too many stocks where my mind and my gut agree - so I am passing on NS - even thought I know I should not.

55.67+0.50(+0.91%)Apr 24 4:05 PMEDT