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Enterprise Products Partners L.P. Message Board

  • factoids2002 factoids2002 May 10, 2005 7:04 PM Flag

    DCF figures and valuations

    I have posted DCF estimates and valuations from those estimates [price/DCF] on my April MLP update -
    I want to request any DCF data from other brokerages that anyone is willing to share. Listed on the page are estimates from brokerage 'B' - which COULD be Smith Barney - and brokerage 'E' - which COULD be AG Edwards.
    I hope you find the data already there of some value - and welcome any comments on the page. And thanks for the kind comments on my CC postings.

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    • That is a top notch website.

      If you are looking to add anything, one thing that I do on a frequent basis, is sort the MLP's by yield(or by the inverse of yield which is the multiple on the distribution). I have uncovered more info from that simple charting exercise than just about anything else. You would be surprised at the movement that takes place.

      • 2 Replies to rrb1981
      • rrb1981 wrote: "one thing that I do on a frequent basis, is sort the MLP's by yield."

        At present, I do not have an alogrythm that will do that. I would like to keep the coding simple, in the event that I find a newbie that will eventually take over the update. Also, I currently think that yield movements are the result of price movements [except when they are the result of distribution movements] - and price movements result from other factors [like distribution changes, earnings estimate changes, DCF changes, rating changes, and secondary stock offerings].

        What I want the update to do is explain price movements. Example: CPNO, EPP, KMP, PAA, and PPX had distribution increases during April. So it would be nice to see this reflected in their price movements. Did it happen? NO!! Does this happen with REITs and banks - YES!! There is a strong correlation between distribution increases and stock movements. There is a strong correlation between [FFO and EPS] estimate changes and price movements.

        So the MLP update is failing to explain price movements [while my REIT and bank updates are doing a good job].

        Does that fact that MLPs have K-1's and more tax implications when they are sold effect monthly price movements? Does lower institutional ownership mean less churn? Are MLPs slower to react to new market conditions? I currently believe the answers to all of the above are yes.

        Why did HEP move up 20% last month? A distribution change? No. An upgrade? No. An EPS change? No. It probably went up because it had a decent CC, and it is just now getting on investors radar screen. And if there were changes in HEP's fundamentals, they have yet to be reported in the metrics that I follow.

        I would suspect and predict that as this sector matures and as institutional ownership increases - the metrics that I follow and report on the update will do a better job in explaining price movement.

        As an example of my expected future success in explaining movements - view the Dec 2004 REIT update. You will see that changes in FFO estimates do a very good job of explaining price movements for the year. And to some extint, those REITs that had a level of success beyond what their FFO movements would explain in 2004 are paying back this outperformance in 2005. Maybe my MLP site will be as predictive in 2006.

        Thanks for your suggestion, and your compliments.

      • Re to:rrb
        "one thing that I do on a frequent basis, is sort the MLP's by yield.."

        One thing I do is to take distributions for 10 periods and in XL spreadhseet do a best fit growth curve. I do it in two parts to see if there is a best fit for part of the time and a best fit for another part of the period. This helps even out the stair step effect of distribution rates. Surprise is that for several MLP's the rate of growth increased at a pivot point ~April 04. I find a best fit growth line for the first 6 quarters, then the last 4 are in a higher growth line. This takes a bit of work, so I only do it for the ones that I am interested in. That is my list of 10 MLP's that are 5 years or older, and in the pipeline, NG, Curde business. That group of 10 had a total return of 29.3% for 12 months ending 4-29-05 and 250% total return for 5 years ending on same date.

        By the way, worst in class is EEP @ 14% and 99% respecively. Still way ahead of most investments.

        Example of best fit growth
        PAA 4.0% growth for 6 perids, then 12.0 for last 4 periods. (quarters)
        BPL 3.5% and 7.2%.

        I see EPD as a straight line 7.6% with no break in rate.

        I see APL as a straight line 14.4%.

        APL has a price/dist of 57 which is the low priced high growth one of the 10 for now.

        BPL which is a modest grower got it's sails trimmed a bit yesterday. It was pushing 70 P/d and a modest growth MLP. Now only about 64 p/d.

        Happy investing


    • Use these from broker "C"

      Will list symbol followed by 05 then 06 DCF, next Price/DFC 05 finally Price DFC 06.

      cpno 2.87 2.11 10.4 14.1
      xtex 2.04 2.54 17.0 13.7
      EEP 3.73 3.78 13.6 13.4
      ETP 2.22 2.71 13.8 11.2
      EPD 1.80 1.90 14.4 13.6
      KMP 3.35 3.31 14.2 14.4
      MMP 2.46 2.40 13.3 13.6
      MWE 4.15 4.13 11.9 12.0
      NRP 3.22 3.63 14.6 14.0
      NBP 3.57 3.37 12.9 13.6
      PPX 2.32 2.36 13.4 13.2
      PVR 3.54 3.78 12.7 11.9
      PAA 3.07 2.75 13.3 14.9
      SGU -2.09 .15 NM 13.5
      SXL 2.73 2.79 15.0 14.7
      TPP 2.86 3.23 15.5 13.7
      VLI 2.86 3.23 15.5 13.5

      What if anything are you buying now? The above numbers were new last week. EPD and NBP adjusted for current news.


      • 2 Replies to arbtrdr
      • arbtrdr wrote: "What if anything are you buying now?"

        First off, I only own ETP and EPD. One old large cap and one new small cap. Both with large holdings in Texas. I too am a Texas resident. I wanted to minimize the chances of needing to file and out-of-state state income tax return.
        Any new purchases will match that pattern - a grouped purchase of small caps/large caps. And a Texas bias. I have not read [nor do I currently see] a benefit for geographical diversification. I would look to anyone reading this to correct me.
        I have only a preliminary buy list. I have yet to check the pipeline 'maps' to verify the Texas/taxes bias. The list is MMP, MWE/XTEX. I am curious about TCLP - it being down close to 14% year to date with no apparent reason. I would like to buy KMP - but that one scares me for tax reasons. So maybe their i-shares are a candidate.
        I would plan to purchase two more MLPs this year - with a small chance that I will purchase four. I would like to stretch the purchase period out - to dollar cost average into the sector.
        What would keep me from buying four [or buying more]. I continue to closely follow REITs, and somewhat follow banks. An unexpected rise in the ten year's yield would result in falling prices in those sectors - thus creating bargains I would find hard to resist - thus changing this years asset allocation plan. MLPs probably will not be as interest rate sensitive - at least they have yet to be so in 2005.

      • I wish you would check your figures for brokerage 'C' for VLI - which appear to be in error due to [1] their lack of agreement with an existing brokerage, [2] The resulting valuation using your numbers places VLI 'out of the pack' of other MLPs and [3] The VLI numbers look like they duplicate the TPP numbers.
        Thanks for you time, your effort, and for sharing. I have updated the page to reflect your contribution. If you wish to be 'citied' for your contribution - I will do so.

29.06-0.04(-0.14%)Jul 26 4:02 PMEDT