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  • stlbeerman stlbeerman Mar 1, 2006 11:23 PM Flag


    Have you seem the details fo the downgrade? I suspect it was on valuation? I have found Londe to be fairly credible in the past

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    • He is very credible, its just that he is ultra gun shy on making projections. I recall times when management of a particular MLP would forcast growth of X and he would forcast growth of say .75X, and the MLP would come in with growth of say 1.2X, making his conservative projection even further from the mark.

      • 2 Replies to rrb1981
      • Downgrade was totally based on valuation. Londe is solid. However, in my opinion, he is not doing a good job valuing GPs. He seems to admit as much, as his analyses sometimes say it is difficult to price GPs correctly.

        GPs are growth vehicles, and the old time MLP analysts are fixed income thinkers. It is a hard switch.

        I think Londe still has a buy on XTEX and only downgraded XTXI.

        The Citigroup guy seems to have the best feel for GPs. Not sure that he covers XTXI, however.

      • Londe's is very good and yes, he is missing the mark sometimes. I think he is worried about the same thing I am: growth and the associated multiples when you have grown far into the 50-50 split. Don't be surprised to see a multiple of 27X on dividend when the growth prospects are not great and the interest rates go up.

        Let me see: $3 * 27x = $81/share. Not very far from where we are. We might as well buy XTEX or an even "slower" vehicle like PAA or BWP or EPD. Those will give a better yield and should still grow by an slow 8% in price per year.

        The question is not whether XTXI will reach the $3/share dividend, but how much better it will do after that.

        We've had this discussion and we need to have it regularly. I am a believer of XTXI, but always a sceptical (or prickly) one.