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Buckeye Partners, L.P. Message Board

  • b_zerkley b_zerkley Mar 23, 2011 3:21 PM Flag

    Secondary coming...

    My guess is 4M unit to pay for BP deal.. I'll be a buyer at $61. GLTA

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    • b_zerkley,

      Not a bad guess at all. Offering has just come out at 4,800,000 units plus underwriters have right to purchase up to another 720,000 units.

      Stock getting hit in aftermarkets on the announcement, but this is very typical. My experience has been that the sharp selloffs in LP shares that ALWAYS happen when they issue additional units to expand their biz are the very best times to be buying into the shares. Never know when the exact stock price bottom will hit, but buying off share issuances has consistently worked for me.

      Best of luck...

    • BPL has become a leading transporter of refined
      petroleum products in the U.S. The acquisitions have enhanced its strong position
      in the Northeast and Midwest, and the steady cash flow from fee-based businesses should help fund additional accretive transactions.

      In February 2011, the partnership closed
      on its $1.7 billion BORCO acquisition, which will expands its terminalling and storage business and international footprint. Also, BPL's merger with its general partner improving its liquidity position, simplifying its organizational
      structure, and lowering its cost of capital.

      A 12-month target price of $73 is based on a target yield of 5.5% on our 12-month forward
      distribution estimate of $3.995, in line with limited partner peers.

      • 1 Reply to thumbs_up777
      • Your target distribution yield of 5.5% is realistic but very low. Remember we have to pay taxes on bogus income yearly, an income which we will not recieve at all. This bogus income is our partner share shown in K-1 form line# 1 thru 20. If you deduct the amount of taxes paid to the IRS, the net distribution yield maybe about 4.5%. Meanwhile, the company is saving 35% on taxes.

        As an investor, I am hoping for a better capital return. This is the only reason why I am holding my Investment on this partnership.

    • I suspect you're right, BZ. None of the releases I've seen on the acquisition discuss how BPL intends to finance it; by silence, to me, that means equity, not debt.

      Likely, the recent weakness in the share price vis-a-vis other MLP's reflects anticipation of the offering.

    • Hope not I bought at a high still in the red Need to get back to even before the offering.

70.26+0.56(+0.80%)Aug 31 4:03 PMEDT