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Inergy, L.P. Message Board

  • rpbossman rpbossman Jan 27, 2012 7:07 PM Flag

    Look what happened to FRO, NRGY headed in same direction?

    Fro took it all the way from $35 to 2.75 before it bottomed and restructured. They tried to kep the div going but finally gave up. I am very wary of stocks in situations where supply is high and demand low. Seems like NRGY could do the same thing. But I still am puzzled by the Insider buys. Are these guys idiots? The one director dropped $150,000 today at least.

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    • After evaluating NRGY earlier in the year, I stayed away. I did not like the payout ratio and thought the high dividend was the only thing holding up the price of the shares.

      The company kept the dividend high in order to issue more shares over the years. Debt is high and the major part of the business in propane which has been out of favor.

      Most propane sales are made to small users, nothing like natural gas which can power power plants and heavy trucks.

      The fact that directors and management fell in love with the stock means nothing. Cramer was in love with the stock too. Where did that get everyone.

      The question is how much lower the shares will go when the dividend actually gets cut?

      Until debt gets reduced, margins get better, the amount of the dividend cut is known, and natural gas prices go significantly higher, this storage and propane business is going lower in my opinion.

      The question is how low and what the next few quarters look like. Could the shares drop another $5 a share. In my opinion, yes.

    • FRO is a completely different company in a completely different industry...please do not compare the 2