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Inergy, L.P. Message Board

  • ferdiefor ferdiefor Jan 28, 2012 10:41 AM Flag

    To all the bagholders that held NRGY

    While you rode this stock down you missed the greatest rally in G&P MLPs.... MWE, APL, NGLS are increasing distributions at near double-digit rates and have doubled to quadrupled....

    NRGY simply waited for the right excuse to finally announce the beginning of the end of their high distribution and yet they lacked the courage to cut immediately. NRGY knows what it needs to do... the problem is it is the end of their business model and they will need to sell out to one of the other propane MLPs or propane C corporations. NRGY overpaid to acquire its GP. Think about it for a moment. Every other MLP that acquired their GP thus ridding themselves of IDRs has prospered except BPL that is still having to grow its way to covering its distribution but is well on its way to doing so.....

    Prediction is NRGY will be forced to sell itself with no premium.

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    • IF you dont own it or like it
      why are you here ?

    • Ferdie,

      You are certainly correct that NRGY overpaid for their GP, although considering the rate at which the GP distributions had been increasing, the premium didn't seem that high. I think management realized that they were not going to be able to continue to grow in propane so they shifted to focus on midstream investments. Unfortunately, they also overpaid for their gas storage asset in Texas (Tres Palacious). Hopefully the growth in NRGM, and a colder winter next year, will allow them to start to grow their DCF again. Improved gas storage fundamentals would also help.