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Calumet Specialty Products Partners LP Message Board

  • bbb40_39305 bbb40_39305 Apr 29, 2009 6:07 PM Flag


    other than market forces can somone explain to me what made this stock 50 and what sent it to 8. i started buying below 10 for the div and so far it's been fun. straight talk please no bs or sour grapes.

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    • still like what i see but can't figure the low price of 12. s&p new target of 20 so maybe we see 15 this year and with this div, that ain't bad

    • I have repeatedly tried to explain to people why this is such a great buy - they cannot cut the dividend - their MLP states they must pay 45 cents each quarter - if for some reason they miss then it is in arrears - you will get the dividend - that being said the important part is they want to increase the dividend to 67.5 cents a quarter at which time they get 50% of the earnings after the dividend - it was at 63 cents when oil went crazy and they cut back to the minimum - you will see 50 Dollars again - read the proforma and quit listening to people that say the dividend wont be there

      • 2 Replies to clmt1680
      • While I like CLMT, the belief that they cannot cut the distribution is totally incorrect, and while the statement that even if they miss paying it, then it will accrue in arrears is corrct, if they do miss paying it then CLMT would be in a world of hurt.

        The only reason they would not pay is if the paying of the distribution creates an event of default on the bank line. If they do skip it, you are looking at a unit price that will plummet to 2 to 3 bucks. While they could recover from that all one needs to do is look at previous mlps that failed to pay the distribution, few if any recovered.

        Nothing is guaranteed, but CLMT is postioned well and let's hope a dividend increase is in the offing.

      • thanks for that info and where can i read that pro forma. surely there are some covenants or rules that would allow a div suspension. aren't earnings required to pay a div? again--- i am liking what i've experienced so far here

        thanks again for the info

    • Started out strong as in about a year and a half after going public they raised the distribution from 45c to 63c. Even with that the 50 price was high but the general market was strong.

      The unit price dropped as crude ran up. The sales price of many of the products that CLMT makes lags the crude price increase, so margins were significantly squeezed, leading to reduced profits which in turn put CLMT in position to trip bank covenants. The cut distributions from 63c back 45c. Through some accounting moves (LIFO) and dependence upon related parties (reseller agreements, etc), CLMT dodged that bullet.

      CLMT has had an inconsistent hedging plan. Initially they stuck to it, but when crude was at an all time high, they decided to save a few bucks and not buy any protection if crude fell - which it did. So they ate $30 mm or so of hedging losses that should have been avoided. Now the hedging plans have people confused and nervous to managements ability to manage the company. At least that's my take.

      That being said, with crude steady at 50 for the past 3 months, and CLMT well hedged on crack spreads, the company should start producing solid numbers.

      Price should have never hit $7, but general market conditions contibuted to that also. I am long CLMT and really feel the worst is behind them and 18 months out this thing could be mid $20s. Just my thoughts though.

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