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MarkWest Energy Partners, L.P. Message Board

  • tumbler1972 tumbler1972 Dec 18, 2013 9:55 AM Flag

    SA article

    What do you guys think? I did not like it!

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    • Anybody know what in the heck M&R MWE Liberty LLC really is and why they are selling shares alongside MWE? It appears to me that M&R, which is really plugged in, may be lessening its exposure to MWE.

    • The title of the article together with the comment "this MLP should not be in anyone's portfolio" demonstrated right off the bat it was going to be a provocative and ridiculous article.

      And he also ends with a demonstrably false statement:
      "While MarkWest may be a growing company, its unit count is growing as fast as its business, meaning there is no distribution growth per unit."
      "Investors should dump it and rotate into higher quality MLPs that can actually grow the distribution per unit."

      Those statements are easily disproved by the fact that MWE has raised the distribution per unit every quarter for the last 3 years.

    • Here is the rating of MWE obtained from AAII
      Analyst Recommendations

      Analysts recommending Strong Buy 8
      Analysts recommending Moderate Buy 0
      Analysts recommending Hold 0
      Analysts recommending Moderate Sell 0
      Analysts recommending Strong Sell 0
      I'm disappointed at the news from SA, secondary offerings are typical with MLP's.

      Sentiment: Strong Buy

      • 1 Reply to rjraecek
      • All those Strong Buy recommendations with no Sell or Hold Ratings is actually a negative, since it shows all the analysts have extremely bullish expectations for the execution and distributions of MWE, so the units have been quite vulnerable to recent desappointments like the Q3 earnings report and now this secondary at approx $63.40 after the partnership had presumably removed the need for overnight placements because of its ATM program and recent expansion of loan facilities. Management could have and should have toned down expectations before the sudden miss in Q3 and reduced guidance for 2014, rather than making bullish announcements just a couple of days before it announced the bad news.

        Sentiment: Hold

    • The author's premise shows he does not get it. I posted a reply there. The author is suggesting that MWE is growing the DCF at a rate slower than the unit growth. Simply does not understand that there are costs to be paid before a new unit goes into service and then a significant ramp up. I thought MWE got a bit pricy at above $70 but with a tax basis of zero am sort of stuck. MWE has some 14 units that will begin producing $$ from October 1st thru 2014. Thus the run rate on DCF (despite a continued terrible frac spread) should be about $750M for Q4 of next year or more. Absolutely crazy to suggest when MWEE is putting about $3B worth of new assets into service that their DCF will grow at a lesser percentage.

      The premise that a company only sells new units when they think their stock is overvalued is crazy. MLPs like MWE sell when their accountant says they need cash. Comparing MWE with the way Carl Ichan runs a business is insulting.

    • I think it's a joke. It shows a specific lack of understanding of the MLP capital model. Suggesting that MLPs only sell units when they think they are "overvalued" is really naive.

      That said, I sold some units at $70 awhile back and that turned out to be the right call so far. The units don't feel cheap to me in the mid-to-high $60s. But "conviction sell"?? No.

      • 1 Reply to strum_this
      • I personally don't find it offensive to sell when I think something is overvalued. Unfortunately a Company who is floating new units cannot say that. But, a lot of companies take advantage of a strong price to sell stock.

        Personally I am buying more so the lower price is a buying opportunity. But, this is a company engaged in an Industry which is in a very volatile industry right now. I will buy but I know I am taking a risk. I think the Industry knows this also as everyday I hear about new pipeline deals and more and more these involve joint ventures.

    • It would help to know what the article said and what you didn't like.

    • I'll respond to the SA post later, but in sum, I suggest you learn the business and disregard disgrunted unit holder, if this one is in fact a holder. Regardless of the new sale, in my opinion, MWE maintains above 62 per unit.