LINE used to be one of Citi's top picks; for whatever reason, it isn't now.
Based on an increased estimate for the price of oil and a lowered estimate for domestic natural gas, Citi boosted its natural gas liquids price expectation for 2012, saying the most impacted names by these revisions include master limited partnerships in the gathering and processing and crude-levered sectors. Citi raised its adjusted EBITDA estimates by 5.0% in 2012 and 6.0% in 2013 for these sectors.
Citi said current commodity prices continue to benefit many MLPs, and that after incorporating actual fourth-quarter commodity prices to date, its adjusted EBITDA estimates are increasing by 4.1% on average with Atlas Pipeline Partners L.P. (APL) recording the biggest uptick at roughly 14%.
In addition to APL, Citi said its top picks remain DCP Midstream Partners L.P. (DPM), Enbridge Energy Partners L.P. (EEP), Enterprise Products Partners L.P. (EPD), Genesis Energy L.P. (GEL), Targa Resources Partners L.P. (NGLS), ONEOK Partners L.P. (OKS), Western Gas Partners L.P. (WES), Magellan Midstream Partners L.P. (MMP), Plains All American Pipeline L.P. (PAA), and Targa Resources Corp. (TRGP). Here’s Citi:
In the current environment we remain positive on midstream MLPs that are closely tied to the producer or downstream industrial customer. With a lower cost of capital, midstream MLPs have the ability to provide the necessary infrastructure to service these cyclical customers on mutually beneficial terms. We believe that the following sectors will perform well in 2012: gathering & processing, NGL logistics, and crude oil logistics. Conversely, we remain cautious on the following sectors: retail propane distribution, natural gas storage, and long-haul natural gas transportation.
Thanks for the update, Grothred. We've owned LINE twice over the years. Got stopped out once. Boy, has this MB gone downhill. Too bad, it's a great company. Best of luck to all but the imposters. Guess if we put Jack on ignore, we won't know if it's him or an imposter. This is not a good thing.
A similar conclusion as I posted a few days ago with significant overlaps between their picks and the ones I suggested in the G&P space.
To which Jack responded that they"
"offer no special merit, but that's obviously my survey judgment; market pricing offers the generally best pricing valuation, so let's consider them all fairly priced right now, with no special bargain quality for currently buying more."
Followed of course by his usual rant on how they are all inferior because they have IDRs.
Thank you RLP.
"We believe that the following sectors will perform well in 2012: gathering & processing, NGL logistics, and crude oil logistics. Conversely, we remain cautious on the following sectors: retail propane distribution, natural gas storage, and long-haul natural gas transportation."
I believe you have your answer here. 2012 time frame. Their picks are all midstream oil services. Also there is a wait and see on LINe which was supported by the cost challenges last quarter.
Keeping in mind Jack's comments about the excessive GP IDR at KMP are very valid, Mr. Kinder is an honest value added manager. He is positioning KMP for an American plain old clean dry natural gas future.