Since EPD is a limited partnership, its distributions ought to be reported as K-1, is that correct? EPD is not a 1099 dividend paying corporation! I have always shunned K-1
entities as being onerous at tax times, am I making too much out of that???
ARBTRDR - a big thank-you for the stats - it really helps to have that 3rd brokerage - without your stats I would not have an estimate for CPNO, and there would be several for which I only had one estimate and now have two.
I hope that the includsion of these stats has value to you - and inspires other to share if they have stats from . . say Merrill, Wachovia or Raymond James. I think MLP investors need and deserve to have consensus DCF estimates. And at the moment, such a number can only be done through collaboration.
I understand the pluses about MWE. It just hurts mentally investing in a company where you don't agree with the management. I live in Arizona and travel almost every summer in cooler places. Internet access limited then.
The estimated DCF for the stocks in their universe follow. Listing is ticker symbol, 2005E, 2006E.
cpno 3.61 3.79, xtex 2.05,2.52 eep 3.68,3.75 epd 1.95,2.00 etp 2.22,2.78 hlnd 2.46,2.95 kmp not posted mmp 2.36,2.31 mwe 3.70, 4.85
mmlp 2.62,2.61 nrp 3.80,3.88 nbp 3.30,3.59
ppx 2.46,2.61 pvr 4.16,4.28 paa 4.11, 3.20
sxl 3.01, 3.30 tpp 2.74,2.94 vli 4.19,4.05
The only MLPs suggested for purchase are EPD, HLND, MWE and PVR. Most of the 6 month price targets are slightly below current pricing due to the analysist's concerns (and mine) for increasing interest rates. Interestingly NBP is predicted to actually increase its distribution in 2006 to 3.30/yr!
The most interesting number in my opinion is price/DCF. Most MLPs are in the 12 times area. MWE and CPNO the lowest for 2006 at almost exactly 10 times.
Enjoy. Will try and update every month or two. Give me a reply to a message posting and I will respond if I forget.
Based on my stats from 11-18's close [posted at http://home.flash.net/~factoids/fact4/m0511.htm ] MWE has the lowest price/DCF based on 2006 estimates in the pipeline sector that includes APL BPL CPNO EEP EPD ETP HEP KMP MMLP MMP MWE NBP PAA PPX SXL TCLP TPP VLI XTEX.
BTW ARBTRDR - thanks again for the May DCF estimates from your brokerage. I was wondering if a could get an update on those? You could post them here - or you could contact me - my email address is posted at the bottom of the update page.
I have estimates from one of the worlds largest financial service companies, which is listed under brokerage B - but might be better described as another single letter. And brokerage E would have the letter 'A' if I used its first name or initial. Sorry for being partially obscure [I do not think I am hiding info from anyone on this board] - but I am sure the brokerages would not like the idea of US sharing data - even though they know it is going on.
MWE has a current yield of 6.7% Approximately the same as EPD. Their DCF projection for next year is $3.70-3.90 which would allow an increase in distributions to the $3.50 with coverage at about 1.2 to 1.3.
The last quarter included about $3M in one time specials! Take these out going forward and they continue to increase their distribution. 5yr distribution growth rate is 17%. EPDs is 12%. Going forward EPD is getting too big to find accretive acquisitions to make a large difference with a 9.8B market cap. MWE's cap is only .5B so much easier to increase and they have several projects already on line for next year.
Your high 30's price would be nice but no MLP has a yield over 8.4%. In the gas gathering group the highest is 7.37% No I think the company is priced below its competitors and justifiably so. If management would get more communicative and produce information that is correct, complete, and timely then MWE would move over $50 IMO.
RBC Dain has a chart using a "universe" of about 25 mlps and thier predessor companies back to the early 1990s. They report the yield spread vs the company historical yield spread. Companies such as NBP with low or no distribution growth are at a 250bp or greater spread. Those such as EPD and MMP trade at about 50bp lower in yield. Their numbers are sorted by type of MLP and the NG gathering group has had their yields skewed recently by the spike in NG prices. You get a few strange ones like APL where the company doesn't really fit into a standard group but in general their analysis is true.
Their thesis shows a definate correlation between TBills and yields. They factor in the distribution history. The historical spread has been decreasing from over 5% in the 90s to about 2% today. They attribute this to increasing awareness of MLPs, a longer track record of preformance, and law changes allowing institutional purchase of units.
I am not a technician but do look at statistics and patterns. I enjoy your date/investing comment. The same almost always happens when an MLP announces a new issue of units and the units temporarily drop as much as 10%. Always a good chance to pick up some more. My problem is the my EPD came from GTM via EPN via LEV in early 1996. As you might guess my basis is zero. Oh well.
The market for MLPs is changing with acquisitions being made but at ever higher multiples. Used to be proportionately about 505 cheaper and much more accretive to distributions.
I'm currently still struggling with MWE and their inability to communicate correctly in press releases, answer letters or e-mails, and generally conduct business in a professional manner as measured by the above. The company appears sound and they are getting most of my new money along with some to EPD and others where there is a temporary drop.
Hope you find helpful. ARB
"Suggest you research correlation between interest rates and unit prices before you invest."
I have but it is not easy. Raymond James did but their chart is faulty. Also there was just very few names to use for MLP's back in the early to mid 90's.
However, I think the FEAR of interest rates going up has a short term influence in prices of units. If people did their homework they would see little competition between a 4.5% 10 year bond, and a growing MLP. Heard this am the 10 year was now below 4.5%.
By the way, where were you years ago when I had not heard about MLP's. Finally someone clued me in and I started looking at them. I'm late to the party, but still think there is plenty of returns for an old coot looking for low risk, cash flow.
Kidding about that first line of course. Still glad a retired friend asked me about BPL and I started to look, then bought BPL. Later sold to buy KMP as KMP looked like the better one, once I found a list of MLP's a and did my own homework.
We share 3 of the 5 MLP's.
Maybe great minds think alike. (in jest)
And I do not have an IRA so that part does not apply, so I do not spend any time on that subject.
What I do watch is this. Calendar history.
If you got into the market on Oct 26, every year in the last 11, you would have made 4% per year average, with at least 1% in the worst year, in the following 8 weekdays. That one I play. And this: mid cap index beat the S&P every year in the last 7 by a huge margin. 10% points per year average. Small cap is similar. RUT (small cap) up 1.54% today, and puts both the S&P500 and RUT up over 4% since Oct 26. Not as good as last year, but I can take it.
To hold in an IRA or not is a personal choice. If one owns a large position in an IRA there can be a tax liability from the IRA! There is no way to know before if you will have a problem and the UBTI allocation is different from unit holder to unit holder. UBTI is unrelated business taxable income.
My personal question is why would you put a investment in an IRA that is already about 80%+ tax deferred. Wouldn't an investment in a high growth stock be better suited. I perfectly understand that the last 5 years put MLPs into high growth, but guidance for the future is much more limited on the upside due to many factors including maturation of the MLPs as an investment vehicle.
I also own 5 mlps - TCLP, EPD, APL, MWE, and PAA. Have owned most of them or their predessor companies for up to 10 years. Continue to invest on dips.
Suggest you research correlation between interest rates and unit prices before you invest.
"What is an MLP?"
No reason to be sorry, just ask.
Not to me but you can get real good info here.
"Publicly traded partnerships (PTPs), often known as master limited partnerships (MLPs), are limited partnerships which are traded on public exchanges. A share in a PTP is called a �unit,� and PTP shareholders are known as �unitholders.� PTPs can be found on the New York, American, and NASDAQ exchanges, as well as many regional exchanges.
PTPs allow the affordability and liquidity of corporate stocks and bonds combined with the advantages of investing in a partnership. PTPs generally pay their investors regular cash distributions, and many offer growth potential as well. There are currently over four dozen PTPs on the market, mostly in industries related to energy, natural resources, and real estate. For more information on PTPs, click on the links below. "
For the record, I own 5 MLP's
Rate of , , 12 Mo , 5 yr
Growth , , Return , Return
24.8% , ETP , 42% , 369%
16.0% , APL , 21% , 256%
11.2% , PAA , 24% , 209%
9.2% , KMP , 22% , 203%
8.8% , EPD , 14% , 164%
First column is growth rate per year in distributions.
After ticker symbol, is the 12 month total return for each, and last col is 5 year total returns.
For comparison, S&P500 was -6% for 5 years, and +3.5% for one year.
So one just has to decide, is the extra tax work worth that kind of performance?
costs me $30 extra per year to have a professional tax person do it.
"You do not pay any tax yourself: the IRA is the unitholder and therefore is the taxpayer."
The more I hear, the more complex it gets. Having MLP in IRA sounds like making one's life a maze of doom. Hard to think is is worth the effort. Glad I do not have the problem.
KISS = Keep Simple Stupid
And remember, your capital gains in your IRA will be paid at top tax rate. Hummmmm.
But on the technical side: best time to sell is the day before ExDay. Best time to buy is one day after. Example: TPP. 4 days before Ex real time chart shows steady 4.6% gain right up to the close on day 4. Ex day, within minutes, price down 4.5%. So, the buyer loses the 1.66% distribution but gets a 4.5% discount. And the 1.66% defered will be paid someday at top rate, and the discount goes against cap gains so it will effect low rate at some future date. And this example is typical. Maybe no big deal, but, why leave $$ on the table.
Oh Yes, I sold TPP the day before ExDay. Reason below. Copy from my post on KMP>
APL , 5.2%
PAA , 3.8%
KMP , 1.3%
ETP , 2.6%
EPD , 2.4%
avg , 3.06%
Annualized , 12.24%
The increase in my favorite (ones I own) this distribution period. Of course these increases are not even as they are nill some quarters, then a big jump the next. However, with all these showing some advance, the average looks good.
TPP came up zero AGAIN. They had one advance in the last 7 quarters and that was 1.8%, so that is not on my list. Sold it the day before the ExDay.
Conclusion: those MLP's that have been growing, are still growing nicely. Life is good.
These stocks have had this performance for the last 3 years. Hope you are not into big cap, big name stocks, rather in MLP's. No contest!
GM , , -18%
WMT , -21%
PFE , -34%
MRK , -49%
IBM , -2%
MSFT , -4%
ps, MSFT dividend might have made them even. EVEN for 3 years? Go buy MLP's and make $$$.