As per what i heard, fiscall cliff tax increase should have min. impact on MLPs, since 80-90% of income is tax as return on capital, dividend is only 10-20%....
something we retail investors are not aware of..i am seeing as opportunity to accumulate, it should be back in 50s in Jan..
any ideas from this board, no spam please
What you are seeing is reality. The effect of gravity on the stock of a company that has long funded its Dividends with massive borrowings and issuances of new stock. EPD's Net Income + Depreciation + Amortization has basically equalled Capital Expenditures for years. That's a big net zero for cashflow. Where did you think the Dividends came from....the tooth fairy? Just glance at the Cashflow Statements on the Yahoo screen for chrissakes. Some energy MLPs are well run. Most are leaglized ponzi schemes. The next bubble, pardner. Get out, or go short.
Sentiment: Strong Sell
I think it's pretty simple. Investments that have made huge gains over the past few years are lagging right now because those are the ones being sold to lock in said gains at the guaranteed lower tax rates. Capital gains are going up too, not just taxes on dividends...
Actually very simple. Go to Investor Village and look at the MLP board. There is a long discussion about institutional selling that is going on right now. Most hedge funds lock in clients except for several windows. One of those is the first 15 days of December. Retail clients do not sell short positions as most do not know what it is. Retail clients also do not put 50K units blocks up for sale and when that block sells offer more at .20 lower! If you saw the chart for many of the MLPs over the last week you can actually see the action and how the prices moved. EPD, MWE, WPZ, APL and lately EPB all relentlessly hammered.
Intrinsic value is all that is important, not market fluctuations. I learned that in 1970. Just find an EPD and hang onto it like Dan Duncan did. Do you think Warren Buffett dumped his Berkshire in the market drops he went through? The CNBC mentality is causing a lot of people to leave a lot of money on the table.
Wish I knew what was going on. Previous post has a possible explantion of hedge fund redemptions but that's over my head. I don't think this is related to the fiscal cliff for the reasons you stated, unless they plan to completely redo MLP structure (which I have NOT heard!). I've been watching and bought some more yesterday and may go in again if it drops much more. Best MLP in the country in my opinion, been holding since they bought TCLP, and growth plans seem to be on track and funded. Just going to see how it shakes out.
Nobody knows what is going on exactly. And that is just how Obama wants it. Crisis after crisis! If it is a Democrat it wants to spend and tax. So hold on to your money, honey we have 4 years of it coming without any restraints. I hope Obama supporters are the ones who lose their jobs come Jan. 1st. They asked for it!
There is an increase in short based off a very small base. I think if anything it’s some of the retail hedging their positions (instead of selling their shares which is a no-no in a taxable account) in case of a tax cliff hammer coming down for the MLP’s.
I don’t believe there is going to be a change in the tax deferral nature of MLP’s.. but we shall see.
I don't know what's going on but there's been relentless selling pressure across the sector. You usually see this type of action during big sell offs when these hedgies, who often use these as cash alternatives, are forced to sell do to margin calls but that's simply not the case here. It's starting to tick me off.