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Eagle Rock Energy Partners, L.P Message Board

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  • ruby.thedyke ruby.thedyke Nov 4, 2010 4:51 PM Flag

    Priced for perfection, I must say

    I was in at the crash too, but I also had to sit on some shares I bought in late 2008 before they pulled out the rug on the distribution. As the recap became more clear I continued to add, and sold right after the recap, waited a bit and bought more through the rights, which turned out (probably by luck) to be the most efficient move. Anyway, it's now my second largest holding, probably I'll hold it to the grave, barring some future problem.

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    • ruby what happened to your concern about debt ratio on your charting?

      • 3 Replies to mlpvestor
      • It's off the map, isn't it? I must say I was surprised, and I intend to start modeling EROC vs. the Kerrisdale projections starting next quarter, and will keep a weather eye here for the first hint of liquidity troubles. The ratio should improve quite a bit by mid 2011, but obviously this company is vulnerable to a serious economic downturn.

        My first instinct is to cut way back here and re-deploy, which would only result in a modest income reduction due to recent yield compression. Unfortunately, as a result of getting back in through purchasing rights, I'm looking at s/t gain, and I'm already sitting on a huge stack for 2010, I'd get killed. I'd really like to sneak into mid 2011, but I've always bailed when liquidity appeared to be issue, and I wouldn't hesitate if that was the case here, taxes be damned.

      • There will of course be an automatic $125M influx of capital through the warrants. If that was in place right now, the ratio would drop to 7.5, even with current maintenance capex, but that's still way too high. We'll see, the Kerrisdale numbers were decent, let's see how close actual results are to their targets.

      • Kerrisdale vs. actual, Q3:

        Debt, 503.5 vs. 515.4 actual.
        EBITDA, 32.5 vs. 33.2 actual.
        DCF, 20.7 vs. 17.2 actual.

        The lower DCF may be due to management tossing more into the "maintenance capex" category.

        Oddly enough, Kerrisdale forecast the unit price to be $7.60, but only by accident, they based it on a projected distribution of $.209 capitalized at 11% (annualized).

    • I was in before the crash, at that time is was $40+ and yielding 4% compared to 10 yr treasuries yielding 6%. That didn't make sense to me soooo, I sold, one of my very few successes.

      Anyway, at this price I believe its a screaming buy,

      It's EV/EBITDA is around 5 wherein most other mlps are selling for around 10 -20 range (and even higher).

      Also, its price-to-Cash Flow per share is around 3.5 whereas most other mlps are selling for around 10 or so.

      Who knows except the Shadow

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