Oh where were all these downgrades months ago. So Moody's downgrades their debt after the horse has left the barn. There is a giant sucking sound on capital and it is Bluegrass. With the cuts in the divvy Moodys still doesn't think they will reduce the debt. It is not looking good for a divvy restoration any time soon.
Well I guess that may depend on whether the 1.60 rate of coverage that they are forecasting holds up. If 1.50-1.60 coverage is the bottom then I think a 15 price is reasonable. A lot also depends on whether the .10 divvy is a one off or they maintain that for the next 3- 4 quarters. If they go back up to .40 next quarter then a 15 price seems pretty good. My quick math shows the assets are worth $16 a share so down here it seems like a good candidate for an asset sell or outright sell of the LP.
Sold one of my dividend dogs today and rotated that money into WMC. Time for this to move higher.
I ended up selling above 15 and am not looking back. Nothing in the CC gave me a reason to stick around and see if there was a bounce coming. I would be very surprised to see this trade down to 12 as there is pretty good value at 15 where I sold. It was a pretty near straight swap for me into WMC which has a nice divvy so that is what I did, not promoting that particular security, but it made sense for me to try and maintain my income. I am interested only in companies that maintain or increase the divvy not decrease it. Don't want to predict a bottom for this but I feel we are pretty much there already.
Institutions don't like surprises like this. My guess is that they were already selling before the release and now wholesale dumping is in order. I sold my remaining shares this a.m. put the money into WMC. They should do a .80 to .90 divvy per quarter You can get your divvy money back that way.
Yeh, the fact that they reduced payout so dramatically should be a big red flag. You can sugar coat the bitter pill by saying you won't have to do a capital raise but the fact is, they are really getting cash crunched and that was the real reason for the dramatic cut plus Loews willingness to pony up the bucks shows they are in really bad shape. So we get a 20% drop in earnings this year and at best, flat next year. My guess is that they spent a lot of money on Bluegrass expecting a big payoff and now they see the project is going to be a bust so they are indebted for a project that just isn't going to pay its way. The money has to come from somewhere and so it comes out of shareholders pockets. BWP, gambled and lost apparently.
The trouble is that you don't know what they will earn in 2015 much less what they will distribute. They are projecting a big drop in earnings for the year so until they stabilize the earnings you can't really say what the distributions are going to be. If earnings drop again next year then you have a falling distribution. People might buy into that but they are going to want something north of 10 percent to compensate them for the risk. At a 1.60 distribution, and a question mark on future earnings, I would not pay more than $16 for the shares. I would assign a %10 discount for the fact they have inconsistent payouts and another %10 discount for question mark earnings. At a 10% yield, I may take the risk but at a sub 8 percent yield no way. Loews burned too many bridges.
I don't see a reason to step in and buy here, much as I would like to sell you my shares. There is just too much uncertainty with earnings and the dividend. What would help is if Loews stepped up and bought a bunch of shares here. At 15 or lower there is no earthly reason to sell as I think when the divvy is restored you will get a better price. I really don't see this falling to 10.
I own some shares but thankfully not many. I was always pretty skeptical of the payout and now we see why. Admittedly, I was enticed by the yield. My bad. Sorry for the investors that lost big money on this. At 15 I won't sell my remaining shares. I just think the risk has been taken out of it. That said, it doesn't necessarily mean it is a good investment. If Bluegrass doesn't work then you could suffer some years of declining earnings. Provided that earnings stabilize you could be looking at a .40 payout a couple of years out. Now at 15 that isn't bad, on the other hand, the question is not only can they grow earnings but can they even maintain them.
Sorry but this won't come back. Dividend investors don't take well to having there dividend cut like that and future investors will look at the way they wacked the dividend and believe that there are forever question marks to the dividend. They have tainted their reputation for delivering a dividend forever more. Even if the dividend comes back in a few quarters the damage to their reputation is done. The stock will always carry a risk premium and at 20 I would gladly sell what I have left.
The cut implied that the dividend will be reduced for the remaining 4 quarters of the year. They also implied 4x coverage that rate. So in English the rate would be roughly 35-40 cents per quarter when restored. I guess at the 16-17 bid you should probably hang on because that is 10 percent divvy rate once restored. At above 20 I am inclined to sell this and take my licks. Who knows if Blue Grass will be approved or improve revenues even. Right now they are forecasting a drop in earnings so you may be waiting a long time for an increase in earnings and payouts.
It was pretty clear to most that they were paying out too much in dividend. I think most of us shareholders expected either a cut or a new offering. The coverage just wasn't there. Personally, I was expecting around a 10 cent cut not a cut to 10 cents. The fact that they are not doing a raise is good but pretty weak consolation at this point. The value of the stock would have dropped less by a new offering vs a divvy cut in my opinion. If this is a one time cut that is one thing but if this is the beginning of a series of low payouts then shareholders have gotten a big shaft by Loews.
This is total BS. You just don't do this to shareholders. I understand the need for a cut if the earnings aren't there but cutting down to .10 is just ridicules. A total outrage. I am done. I will wait for the CC and they have a lot of "splaining" to do.
How many times are we going to have to listen to this loudmouth Carl Tweet that he has bought more shares. I wish that old fool would just go away already.
If you are too poor or cheap to buy a proper OS then Linux is for you. I have a few tools that I run on Linux but it is just to flimsy to use for everyday use.
Well many folks like 8 but Windows 9 is just around the corner.
Sentiment: Strong Buy