Last night, Mad Money host Jim Cramer, a complete wild man for ETP at one point in time, blasted Kelsey Warren; ETP's CEO, for coming on his show and stating that the company would not need to raise new capital in the near future...only to do so just a few days after the interview. Cramer seemed VERY angry about this, and stated ETP was not only his worst holding in his trust, but the worst MLP out there. I say..."Come On...REALLY?!?!"
First off, even if he wanted to do Cramer a "solid," Warren cannot come on TV and just start giving up proprietary information on his company and its plans...that secondary had been in the works for a while post the SUNOCO deal, and Cramer was just too "in love" with ETP to press the CEO on the show. Secondly, ETP is by far nowhere near the worst MLP out there...it has a HUGE distribution per share, and a great yield, not to mention tremendous potential in the future to increase its distribution due to all the "acquisitional" activity of late.
I think Cramer is too impatient, as well as a little "blind" at the time of the interview that a company would not need capital financing with an impending acquisition of the SUNOCO size. He needs to calm down and just wait until 2013 when these acquisitions really start to contribute to ETP...for now, he should be happy to get his 8%+ on the investment and live his mantra of "getting paid to wait." This is not a "trade" Cramer...as you say, it's an investment. GLTA.
You expect this monster acquisition to go smoothly and contribute immediately to ETP. Integrating large purchases always take digestion time. Not every asset purchased has good profit margins that equate to an 8% return, especially gas stations. I owned one and a family friend had 20 of them. The margins at retail stations is much lower than what ETP gets on their asset holdings.
It is going to take time and shares and cash have to pay for this transaction. Also, duplicate overhead and personnel have to be evaluated for potential savings. Still severance packages and sales of pieces of this acquisition will take time. Sunoco did not generate 8% cash flows for their investors on those gas stations.
The next 12 months will probably be rocky for ETP. I suspect the 2014 starts to see the good numbers but the stock could see further declines in any broader stock market decline and Europe is in deep trouble. Unemployment in Spain is 25% and my friends in Italy say that things are deteriorating there. Europe's trouble in 2013 is going to impact the U.S. much more than what has taken place in 2012. This run in the U.S. stock market is going in another direction in 2013, just watch! If that happens ETP is going lower still. The new projects being completed by ETP will not show up until 2014 numbers as this acquisition is going to have issues. Those stations cost over $1 billion dollars and they just do not generate 8% returns, mark my words.
Don't be so rough on Cramer. He has to put a show together every day and there is only so much news out there. He also was plugging Cliff at 80 last year and now it's 27 and he hates it. He is not really and investor but rather a short term speculator. In most cases when he likes something it's too late to buy it.
He is worth listening to but NEVER buy or sell on his recommendations until you have put in hours of work to see if he is in the weeds for the long term.
There is only one important issue with ETP. Is the 3.58 cent dividend solid. I think it is for now and with a yield of 8.3 that makes it a buy for now.
What is the difference between JIM Cramer and a Weasel,other than whiskers? I say no difference. In my opinion Cramer tries to influence the market to his own benefit and the benefit of a entity like a hedge funds that he works with. I do watch his show but attempt to stay out of his way. When he pumped STON i sold my shares. When Cramer said sell K near 52 week low i loaded up. I think Cramer is a crook who looks only after Cramer.
If i had road ETP from $80 to $27 i would hate myself more than the CEO.
I in no way think bad about Jim Cramer...putting on an show like he does is unreal, and he does have good ideas and sheds light on some stocks that are a real value if at some point in time. I just think ETP was bashed too much on his show last night. It's not the worst MLP out there by far. The distribution is safe, and I don't think that's the issue with it, or has been...it's the growth of the distribution people want to see. But well respected MLP's like EPD are only paying out $2.54 per share, while ETP is paying out $3.58...I mean come on, ETP has the bigger yield, and the bigger dollar value, and is doing things to grow...give it time is all I'm saying. GL.