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Breitburn Energy Partners LP Message Board

  • gav_sharma gav_sharma Dec 9, 2010 6:10 PM Flag

    Baupost Sells 30% of its BBEP holding


    As per the latest filing Baupost owned 4,983,600 shares while it owned 7160500 on 9/30/2010.

    I sold mine too early at $17.4 per share but with average cost of $7.2 and $1 per share in dividend I couldn't complain.

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    • Seth Klarman has always positioned Baupost Group for income appreciation through buying stocks with potential for high price appreciation (not dividends or distribution). BBEP has certainly given him that since he increased his position by 838% in the 3rd quarter of 2008. Now that BBEP has reached a price close to its fair market value, he is probably moving some of his profits into other stocks that he feels will have a better chance for higher price appreciation in the future such as ALR & REGN.
      That, to me, does not indicate a “negative” vote for Breitburn. BBEP’s future growth is limited. The company officers have indicated that their goal is “single-digit” growth for the future, maintaining or possible increasing distribution, looking for quality acquisitions and continuing to pay down debt. While these are valued by someone looking for a steady high-income stream, they are not likely to product a stock price appreciation that we have seen in the recent past and will be consistent with Seth’s future goals for Baupost. Short of a major acquision or sharp run up in the price of oil and NG, BBEP will likely trade in a range from $18.50 – 22.50. On the negative side, increase in interest rates and/or a down turn in the overall markets will lower the stock price but not, in my opinion, the distribution. This is because of BBEP’s hedging, low debt levels (compared to other MLPs), good management and leases. In other words, BBEP is probably no longer a great growth company leading to major stock price appreciation but it is a very good income distribution company with solid management which should maintain or increase its distribution for many years to come.

      • 1 Reply to nosweat82
      • I agree however, lets not forget that lack of signfiicant future cpaital appreciation is endemic to the entire MLP universe, not only to BBEP

        The majority of the MLP's have had a great runup since the Lehman debacle . Most of them are bumping up against what I call a yield ceiling. 10 year Treasuries are now yildinng 3.25%. soooo, an additional 300 basis points (in the region of 5-6%) is about right for MLP's.

        . Lets not forget that BBEP has one of the highest coverage ratios sooo, I am comfortable holding BBEP since it portends future dist. growth

        Cogent coments appreciated.

    • I posted on evep board some stats that make it hard to pick between BBEP-EVEP_LINE-I want to remain in an E&P MLP-looks like I should have gotten in on Line at time secondary was announced!Day late now more than a few $'s short.Rats

    • that is the reason I sold, didnt feel the upside was as strong as it had been and felt capital appreciation is more important than yield. I hope to do better than 8 percent next year. Went to CLF on some call spreads and stock this am and it was a good start, made 14% today on the spreads adn 2% on the stock, from the 71,98 where I got in. If all you are interested is is in bonds then here is a great place to stay but dont see if going up or down much with out gas exploding up which is always a possibility should the govt come in with some incentives like they do for corn.

    • My attention too,

      I have no doubt that he's more interested in capital appreciation rather than yield Not likely that it will double again in the same time frame. Soooo, he's looking for greener pastures.

      For me, near 8% yield combined with good fundamentals is too good for me to resist IMHO. Difficult to find another MLP with such attractive stats these days. If there is one, let us know.

    • Thanks for the interesting data. Soooo, theres about 45 trading days during that period so his selling averages about 48,000 shares per day. Average volume during that period is 265,000 shares. Data makes sense

    • acutally the baupost group, et al sold 11.79 m units or reduced total holding from 28.5 million or 54 % to 16.7 m or 31.4% in total from Feb 10, 2010 thru Dec 10, 2010 reporting so price has held up real well all considered

      2/9/2010 Baupost, et al
      8,495,939 16.1
      8,495,939 16.1
      8,495,939 16.1
      3,034,984 5.75
      28,522,801 54.05

      12/9/2010 Baupost, et al 4,983,600 9.35 4,983,600 3.34 4,983,600 9.35 1,780,278 9.35 16,731,078 31.39
      Reduced to:
      3,512,339 6.8
      3,512,339 6.8
      3,512,339 6.8
      1,254,706 2.4
      11,791,723 22.7

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