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Magellan Midstream Partners LP Message Board

abbaman7 235 posts  |  Last Activity: Aug 29, 2015 1:31 PM Member since: Jun 19, 2002
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  • 18 ratings firms that cover the stock have a consensus HOLD rating on the stock. 1 analyst has a SELL rating, 5 have a BUY recommendation while the remainder just say HOLD. The average 1 year price objective among these brokerage firms is $35.06. This information, however, is largely based upon reports that were issued in May and June.

  • Reply to

    monsanto syngenta

    by smathan75 Aug 26, 2015 10:57 AM
    abbaman7 abbaman7 Aug 28, 2015 1:03 PM Flag

    Just a point regarding the changes to potash taxation in Saskatchewan. It has been estimated that POT's pre-tax earnings for 2015 will be reduced anywhere from $54 million US to $72 million US or at least that was the initial take. It is possible that revised estimates have lowered that impact even further. However, because of the significant wind down of expansion CAPEX starting in 2016, the change to the tax structure will provide much less impact as the maintenance CAPEX becomes more predominant over against expansion CAPEX. For the most part then, the problem with the modification of the tax structure is that it has affected the timing of allowable deductions for expansionary and maintenance CAPEX.

  • 2 weeks ago, K+S was still hovering around 37.5 euros per share with a 41 euros per share being dangled in front of their shareholders but 2 weeks later, the stock is now sitting at around 33.5 euros per share. You will recall that the stock was trading for 29 euros plus change just before it was announced that POT was interested in acquiring it.

  • Reply to

    monsanto syngenta

    by smathan75 Aug 26, 2015 10:57 AM
    abbaman7 abbaman7 Aug 28, 2015 6:48 AM Flag

    Perhaps there is no absolute 'better or worse' when it comes to figuring out whether a yield increase is preferable to a share repurchase. I will leave out debt retirement from consideration which does have its own merits aside from strengthening the balance sheet such as modestly increasing a company's EPS as debt service is reduced. My own view is that at different times, increasing the dividend is the better alternative while at other times the share buyback should be preferred. In the current situation, with the share price extremely depressed and the nominal yield on the stock quite robust, a share repurchase looks like the better use of free cash flow. However, one might contend that company officials [viz., CFO Wayne Brownlee] have previously laid down a marker that dividend increases are going to be the preferred method of increasing shareholder value although not to the exclusion of share buybacks. CEO Tilk has largely been opaque on the subject. I had mentioned in a prior post that a share repurchase has the collateral benefit of reducing the cash outlay for dividend payments with respect to the shares that have been retired. That benefit coupled with the EPS improvement should make a meaningful contribution to increasing shareholder value for holders of the stock. An outstanding buyback announcement also makes the stock less prone to savage short positions. So all in all, even though I love getting more money for owning my shares, this is a time for a buyback when free cash flows permit. Nevertheless, I would not neglect increasing the yield as well but in a somewhat less utilized manner. Instead of raising the current yield on the stock, POT could periodically declare a 'special' dividend in addition to its regular dividend. In that way, POT does not commit itself permanently to repeating what is ostensibly a one time thing although it could undertake it again at any time.

    As far as I know, former CEO Doyle retired from his 1 yr position.

  • Reply to

    monsanto syngenta

    by smathan75 Aug 26, 2015 10:57 AM
    abbaman7 abbaman7 Aug 27, 2015 3:37 PM Flag

    A share repurchase is not "phony." It represents an allocation of cash by a company possessing a variety of alternative uses for that capital. A company like POT, for example, that decides to repurchase its shares, not only reduces its float and increases its EPS but it also reduces the number of shares outstanding on which it is obligated to pay dividends.

  • Reply to

    monsanto syngenta

    by smathan75 Aug 26, 2015 10:57 AM
    abbaman7 abbaman7 Aug 27, 2015 9:48 AM Flag

    BHP Billiton just reported some pretty disastrous results for its various divisions with no expectation that things will be getting better for them any time soon. From time to time, we hear some folks tossing around the idea that BHP will make another run for POT. Anybody taking a serious look at BHP's financials will see right away that that is a pipe dream that will never come to fruition.

  • abbaman7 abbaman7 Aug 27, 2015 7:12 AM Flag

    Your generalizations regarding the need, or lack thereof, to apply potash annually to farmland are grossly inadequate for several reasons. Here are a few of them.

    1. Soils in several countries (India, China, Brazil) are always extremely deficient in potash. Failure to apply it even for 1 year would be devastating to their agricultural production. Not for nothing can North American farmers produce 2-3 times as much crops as they can (India, China) because they do not follow sound agronomics practices.

    2. Even countries with soil that possesses some residual potash year after year must take into account the affect that any year's crop production has on nutrient depletion. The greater the yield, the greater the depletion.

    3. Skipping 2 years' of potash application without regard to yield constitutes irresponsible farming. Few farmers would take chances like that even in North America, which is where your myopic comments are directed.

    4. Farmers who lack funds and who leave their land fallow waiting around for changes in crop prices cease to be farmers.

    Overall, I would say that shulman_does not know.

  • abbaman7 abbaman7 Aug 26, 2015 5:00 PM Flag

    New Cartel (Uralkali+UralChem+Belaruskali) + $500 per MT of potash = $60+ per share of POT

    Unfortunately, it is much easier to write up the equation than to expect it to materialize.

  • The company just announced a $1.3 billion buyback of its shares representing about 14% thereof. This will reduce its public float, which is already only 23.4%, to an amount that is likely to lead to a delisting of the company's global depositary receipts on the London Stock Exchange which typically requires a free float of at least 25%. The move is thought to be in conjunction with an ownership shake-up at Uralkali. UralChem already owns 20% of Uralkali so the buyback will increase that share. Russian business daily Vedomosti reported in June that the company might delist itself in both London and Moscow as a prelude to a merger with fertilizer group UralChem. The other major shareholders of Uralkali are Onexim, the investment group of oligarch Mikhail Prokhorov (20%) and Chengdong Investment Co., an arm of China's sovereign wealth fund (12.5%). Onetime had previously sold a 7% stake in Uralkali last June and there is now speculation that their entire interest in Uralkali will be disposed of.

  • Reply to

    Markets Up Huge, POT Not So Much

    by abbaman7 Aug 25, 2015 12:49 PM
    abbaman7 abbaman7 Aug 25, 2015 5:31 PM Flag

    POT was up marginally until the DOW and the other averages massively reversed course. So I would characterize it falling into the red zone today as merely a function of the late day massacre all around. My general contention though was that when the DOW was up 300-400 points, POT's shares were still going nowhere and that, I believe, is because of the K+S albatross around its neck.

  • Reply to

    Significant for CF holders

    by midnightbob62 Aug 22, 2015 11:50 AM
    abbaman7 abbaman7 Aug 25, 2015 2:44 PM Flag

    I am watching. I don't see anything noteworthy. And it hasn't recovered from even yesterday's hammer job let alone its decline last week. I am a long term holder and buy more every 3 months or so plus I do the DRIP. So I am accumulating shares but they are not going up to my liking.

  • Reply to

    Markets Up Huge, POT Not So Much

    by abbaman7 Aug 25, 2015 12:49 PM
    abbaman7 abbaman7 Aug 25, 2015 2:26 PM Flag

    I don't agree with you that fundamentals going forward are great; you are not taking into account a variety of headwinds. And then there is the K+S deal that won't disappear.

  • Potash is sold in US dollars. The problem for Brazil is that their currency, the Real, has lost 25% of its value against the dollar. As a result, buying potash is a lot more expensive for the Brazilians than it used to be. The reason that the Real stinks has a lot to do with how the Brazilian government has run down its economy with stupid policies and as a result, Brazilians are not happy with their government right now. Some changes may be in store in terms of taxation and reducing bloated government spending but no improvement is likely any time soon. Uralkali is estimating that Brazil will buy 2 MMT less potash than they thought at the beginning of the year. Chalk that up in large measure to the decline in the Real.

  • Reply to

    Markets Up Huge, POT Not So Much

    by abbaman7 Aug 25, 2015 12:49 PM
    abbaman7 abbaman7 Aug 25, 2015 1:30 PM Flag

    A sad truth. Which reminds me of that remark that the late NY Yankees' coach, Casey Stengel, made on a particularly frustrating time for his ball club: "Doesn't anybody know how to play this game?" Right now, that comment is applicable to POT's management.

  • The stock knows how to go down big time on big down days but knows how to make puny climbs on days like today even though the other AG stocks like CF and AGU are doing OK. Sure there is a lot of negative news out there regarding potash pricing and volumes as I indicated earlier. However, if POT ever gets off the dime and abandons the K+S fiasco proposed acquisition, the stock should make a decent recovery. But at the rate we are going, POT's market cap isn't going to be that much bigger than that of K+S which is a joke.

  • abbaman7 abbaman7 Aug 25, 2015 8:55 AM Flag

    I neglected to mention that China has now imposed a fertilizer tax that will also adversely affect potash imports.

  • Uralkali says a demand slowdown in Brazil, China and India will result in global demand falling to 58 MMT from the previous estimates of 60 MMT. In the case of China, the recent devaluation of the yuan makes imports more expensive. In Brazil, tighter credit and falling crop prices have already caused potash prices to drop about 15%. In India, the falling rupee hurts potash imports. I wonder whether we will be hearing confirming comments of market difficulties like these from POT.

    Unrelated to the foregoing, Uralkali also commented on the sinkhole situation over at its Solikamsk-2 mine. The most recent measurement of the sinkhole yesterday indicated that it now measures 122 meters by 125 meters at the surface and that the average brine inflow during the last 10 days totaled 310 cubic meters per hour which is what the company reported last June.

  • Reply to

    Significant for CF holders

    by midnightbob62 Aug 22, 2015 11:50 AM
    abbaman7 abbaman7 Aug 24, 2015 3:26 PM Flag

    Take a look at how CF is getting hammered today.

  • Reply to

    Fertilizer Anyone???

    by devilswinning666 Aug 24, 2015 11:11 AM
    abbaman7 abbaman7 Aug 24, 2015 11:57 AM Flag

    What evidence do you have for your statement? Lower sales from Home Depot do not count.

  • abbaman7 abbaman7 Aug 23, 2015 9:25 AM Flag

    There are only 2 companies POT should keep its ears and eyes open with a view to acquiring control thereof--SQM and ICL. In each case, a stock purchase from only 1 shareholder will achieve the desired result while leaving each company a public one. Thus far, POT has been blocked from pursuing either acquisition. Still, one day these might be possible, especially with regard to SQM where there would be no governmental or labor intervention. K+S, on the other hand, makes little sense and is way too expensive in terms of what would be achieved by acquiring it.

MMP
71.94+0.75(+1.05%)Aug 28 4:04 PMEDT