I may sound like a broken record as others have pointed this out - but, MLP's like ETP have only 2 ways to fund expansion and acquisitions - debt and equity. As an MLP, cash must be passed to unit holders so they cannot retain $ for projects and expansion. Management has to compare the 2 and I am pleased that ETP is protecting their credit ratings by issuing more units.
Take a look at what is on their plate - they have Tiger - a HUGE project that is around $1.5B that the capacity is basically sold coming online late this year - this is the largest project to date for ETP (from what I can tell from their materials). And, it is 100% ETP unlike many other projects where there are partners that build these mega projects. They also have/had Fayetteville, another big project.
To fund this with offerings to me is smart - ETP is evolving to be a much larger player and have already gone on record that distributions will increase later this year/early next (I am sure when Tiger goes online) - hear the latest conference call to validate this fact.
I have played MLP's for many years (remember Gulfterra Energy Partners - acquired by EPD) and all I can say my formula has been buy on the offerings and hold for the dividends and stop tracking every $1 change in unit value - IMO ETP will be $50 again, probably before the next distribution announcement.
Any increase in units offered is probably based on demand by the market. The question for management is can Etp put the money to work earning more than the payout. I must say the movement in Etp,s stock price over the past year is more that I would expect. It can have big moves in both directions. I would have thought it would have had a tighter range based on the payout.
I'm still not concerned. I own several other MLP's and have never been hurt by an offering, no matter what the size. It usually creates a buying opportunity because a lot of people don't understand the differences between MLP's and other stocks.
It shouldn't be dillutive since , in managements opinion, the additional investment from the offering will have a higher rate of return than the present distribution yield. If you own MLP's you should get used to these offerings.
no problem. I have researched this company a lot actually. And I was considering buying this morning, until I saw how they jacked up their offering overnight after it was reported yesterday at the close. This kind of change with no comment from management as to why it was changed is very suspect, IMO.
Someone at the company is taking their stockholders VERY much for granted. My advise is to find MORE honest management or maybe a more honest company to invest in. I for one will be doing that.
Announcement was for 8 million shares, plus 1.2 million overallotment. Nothing has changed since yesterday. That is common practice. Also, none of the 9.2 millions will dilute stock value. If you don't know the reason for this, please do some homework. Hope all new shares are already bought (probably are). Stock will rise from here. But if you don't understand the dynamics of this, I advise you steer clear.
I have done homework pal, you can't read. The deal today is 9.5 million with an over allotment of 1.45 million. Total 10.95 million, . Yesterday it was 8 million with over alloptment of 1.2 million. total of 9.2 million. It changed today from total of 9.2 to 10.95 million. Read the news release and add the numbers, and stop attacking the me for asking why the overnight change.
If you don't think it changed YOU need to do homework and add the numbers
here's how stupid some of us are:
i bought about 7 yrs ago....well under $20. even being down from $60, my paper gains look good, and that's not even taking into acc't the distros; however, i'm not selling. distros rec'd on the cost basis are amazing.
over the 7 yrs, new offerings have only temporarily pulled the stock down all while eventually increasing distros.
most mlps are meant to hold and etp is a classic example of the benefits one receives for being patient.