I sold out yesterday... at around the close today. This is a highly leveraged company, that has a concentration of around 13% in Red Lobster restaurants as lessee's. I worry about added cost of capital (S&P downgrade), and management. I'm not sure that the two that we're fired are not the only unethical ones. Usually it all starts from the top.. so there may be more shoes to drop.
I was looking at the latest EPD presentation with BAC today. If you look at the slide on cost of funds... EPD had reduced their overall cost of funds to 5.4% What was even more interesting was the fact that 48% of their debt is 30 years plus and another 30% was 10 years plus. So almost 80% of their debt is over 10 years... and over 1/2 of that is more than 30. Kudos to the finance team over there.
If I hear Cramer say how ALL MLP's will be hurt by short term rates because of higher cost of funds.. I'm going to slap him! Not all MLP's are created alike. Strong EPD!
I think there has been plenty of confusion about whether any increase in mortgage rates is a negative or positive. I'll hope to clarify.
The market reaction in increasing long term rates by a 1/2% or so the last month has indeed lowered the net book value of mortgage reits such as NLY. Since they use leverage, i.e., debt to purchase the mortgage securities they do own.. this effect has been magnified. So you've heard that some of the mortgage reits may have taken a hit of 5% to their NBV... even perhaps more depending on whether they own agency reits or non-agency.
Now the spread.. or the dividend on that spread that is paid out. Short term interest rates.. the rate they reits borrow at.. HAS NOT GONE UP. So the increase in long term rates has actually INCREASED the potential spread. Also, there is less risk of prepayments since mortgage holders aren't likely to refinance at a higher interest rate.. which is a positive.
The bottom line... you take some short term pain in the NBV. But you can expect that gradually the reit portfolio will rotate into the higher interest rate mortgages. The dividend may go down in the short term not due to the spread... but because the portfolio has diminished somewhat (the hit to NBV). This will gradually be offset by higher spreads and a stabilization of the NBV going forward however.
The bigger threat is not whether long term rates will go up.. is if short term interest rates will go up faster than long term. Right now, there is no talk about that. Hang on, and you may actually see NLY making more money than ever.
Big deal.. it's only about a 1% dilutiion to it's market cap. Those that sell in the AH are just in a panic over nothing. It's a smart move by EPD to offer some stock at it's high, when they may need some capital later.
If your saying you sometimes get more back after filling in the K-1 information... then you're doing something wrong. You can't take losses on PTP.. only gains.
There is an increase in short based off a very small base. I think if anything it’s some of the retail hedging their positions (instead of selling their shares which is a no-no in a taxable account) in case of a tax cliff hammer coming down for the MLP’s.
I don’t believe there is going to be a change in the tax deferral nature of MLP’s.. but we shall see.
You sell... you have to recapture at ordinary rates any depreciation, etc.. that has shown up over the years. It's not all capital gain.
Agreed. One of the best ways to get yield on taxable accounts out there. If the taxation of MLP's are left untouched, I expect to see inflows coming in with higher rates on dividends. And I expect a compromise... but rates on dividends will still go up.
Yeah, I have some of DEM in ETRADE. It's out-performed VWO over the long term. Good way to have exposure to the international markets and provide some yield.
If the MLP flotilla goes down... I'd like to go down with the flagship. Wish me luck.
I'm a tax guy... and I haven't seen anything substantial on eliminating the tax deferred nature of MLP's . If I'm right, MLP's will get a nice bounce once this fiscal mess is resolved and investors realize that MLP's offer one of the best ways to obtain yield on a tax deferred basis.
Of course, you never know what goes on behind closed doors
Just a small position ... I"ll keep it for the yield... 7..75% and room to grow. With the reduced dividend, they have some room to improve properties. My bigger position is in in CWHN.. a publicly traded debt note that matures in 2019. Has plus 6% yield.. much safer bet IMO.
Good call on the CWH preferreds. I have some of the debt of CWH. Note matures in 2019 with a current yield to maturity of close to 7 percent. Preferred shaeholders and debt holders are the winners at the expense of the common shareholder.
As long as your US tax rate is greater than 15 percent, your FTC will offset the witholding tax hit. It's a non-factor.
Well, I made a while penny per share on DELL on my first day of owning.... and AAPL went down from my sell yesterday at $702.75 to $698.70. So perhaps I will be the first investor to make money on this trade!
I have two IPAD's, a IPOD and an ancient DELL desktop and laptop. I like Windows 8... and it seems like DELL has some products out ahead of HPQ. I WISH that my IPAD's could do more... and they will never replace a computer... so I will get a new laptop or desktop.
I also like the focus to enterprise that DELL is taking. Their overall profits will be steering more and more away from commodity PC's.
I also am looking at getting in on DELL at a multi-year low, 3% dividend... and a stock that is trading at around 5 times forward earnings (taking out the net cash).
I'm not understanding this. They are paying down debt at a huge cost of capital to us shareholders. I would think the debt savings will offset the increase in distributions due to the increased shares... so I'm not concerned as much about the incremental change in cash flow.
I just started a small position in this stock and feel like they pumped (change to a monthly distribution) and I got the dump. I guess I'll wait to see where the dust settles before I either buy more or sell.