ARCC and TCRD. Yes I take a hit in terms of yield differential but I have a lot more confidence in both of these BDCs. ARCC is paying two special dividends and TCRD also pays special dividends. Special dividends represent extra income generated by these two BDCs. Better to get bonus payments not reflected in overall yield than to see any BDC lock into too high of a dividend level that may have to be cut at some point in the future.
WMB is committed to 20% annual dividend growth thru 2015. I think the hedge funds want to see WMB's value to reflect closer to the much lower yields of best of breed GPs. The assets of WPZ and ACMP are strong and it does not appear to be properly reflected in share price. TRGP sells at a much lower yield. NGLS's assets are very good but in many ways I like WMB's assets better.
I am not so sure. CSE tried consumer finance including auto loan financing prior to the financial collapse. Turned out they didn't know what they were doing. I take note GE is getting out of consumer finance business.... will sell and spin in 2014.
I am skeptical this translates into much of anything in terms of shareholder dividends. What kind of loans and to whom are these high interest rate car and other consumer loans made to justify obtaining a return for BDC shareholders?
I will give management a chance to explain but this may cause me to change BDC horses. I already cut my position by 40% and redeployed into better breed BDCs taking the yield hit at a time when my MLPs are doing double-digit distribution growth as offset to better balance my portfolio in favor of best of breed for retirement living.
Money may be moving into WMB today out of WPZ on announcement that two hedge funds own 8.82% of WMB looking to drive WMB stock value. That can be seen as a negative to WPZ because certain strategies employed by WMB that directly benefit WPZ may start to be moved away from WPZ.
This happened at CHK when a midstream system was not sold to its (then) partially owned midstream MLP, ACMP. CHK eventually sold ACMP to get cash. My guess is WMB shareholders prosper but the relationship with WPZ is altered so that 100% of WMB benefits no longer go to the captive MLP from GP.
MLPs have been hot the last five years. Early in 2009 if you got in and have held you not only have several that now offer double-digit yields to your cost you have double-triples-quadruples in value.
MLPs will be hot as long as they continue to deliver well above-average distribution growth but more importantly continue to strategically grow without making big mistakes. A lot of people complain right now about Obama's policy of limiting federal lands to fossil fuel development.
I take a contrarian position saying it is the best thing to happen for investors. If government opens lands I see E&Ps and MLPs getting overexposed and into trouble. MMP has a great management team but they came very close to doing a deal to move ethanol through pipelines. That would have turned out to be a huge strategic error. MMP was being egged on by government's agenda..... ANYTHING having to do with government intervention has been the downfall of so many industries; housing being the last one destroyed by government intervention.
So let's hope our MLPs keep growing responsibly and don't get sucked under because of government.
I have owned PAA for years. I have to say to anyone who is true long term who cares about one year's underperformance. Today, PAA out of Alerian and PAA's GP in Alerian index. You have to look at your overall MLP portfolio and look at macro performance. Today, CMLP into Alerian and having a huge day. When I measure my MLP portfolio no doubt PAA has been the big laggard BUT PAA is absolute core holding for me and PAA is subject to having highs when logistics (rail) fires on all cylinders and lows when logistics isn't working because short term spreads have tightened.
I have watched PAA grow its distribution at a rate of 4% to over 10% a year now. Remember to consider the bigger longer picture before selling.
Finally, took long enough to realize there was no there there with the Chinese OR let's just say the Chinese take until the fourth of never unless pressured to move.
This clown sank NAT buying ships all the way down to the bottom. No discipline at all.
This is the fastest I have ever seen a BDC secondary get pushed into the market in terms of trading volume this quickly. At this rate the entire secondary should be pushed through by 9:30AM PST.
The Cohens deserve the bad rap they get at RAIT. They had transactions between themselves that destroyed shareholder value at RAIT (sym RAS). ARP is being run by another part of the family.
Higher income means higher yield than other asset classes. I did not say "growing income" although when ARCC outperforms on noi it does special dividends rather than set a higher quarterly dividend. I prefer that methodology and it appears to be taking hold with other BDCs opting for special dividends when noi outperforms.
It is a better reflection of the operating environment where special dividends are a form of shareholder bonus but cannot be counted on consistently.
I have owned ARCC since $6.50. The safer BDC is the one that minimizes capital ownership and focuses on mezzanine debt which is a low to no growth proposition. BDCs should IMO be looked at primarily for higher income AND capital preservation for those who desire a portion of their portfolio where in essence this is your high yield bond side of balance.
So we get a grace period. I wonder if any institutions would take advantage to gobble up the convertible preferred if there is enough of a discount? Sort of like a risk arb play?
I initially thought we would go down on MON as a lot of creditors will sell their shares. If up on MON on extraordinary high volume.... well in excess of THUR and FRI's abnormally high volume.. that will be a very good sign of up side biased share redistribution.
Yeah, maybe at some point you start looking at lost capital and realize your total return over the next three years is going to stink to high heaven. There is no value, these stocks are not cheap. You are buying a pile of paper assets and paper in the end is worth par value if you collect on the debt to maturity. In between money can be made but NEVER when the trough is hit and interest rates start up again.
I don't think you can expect much on MON or the near term.
If this is the first time creditors take the opportunity to cash out then we could see pressure on LCC for the next two weeks followed up with year end buying so mutual funds can say they hold some of the new AAL by year end.
This has been my past experience with one of these bankruptcy combinations but I have to admit this is the first one where the buy side has price targets so much higher than I have seen in the past.
Anyone who expected gangbuster guidance should understand in the legal climate of today there is no percentage in being overly optimistic because there are too many lawyers willing to sue any corporation for the crime of believing too much in their corporation's capacity and ability to deliver.
In other words, better to walk the walk than talk the talk. This CEO learned from the late great Dan Duncan, EPD's founder. This CEO was a former EPD division CEO. I think he knows what he needs to do in 2014 because there is a lot of new assets brought into CMLP that have to be properly digested. I am just starting to read the presentation.
I will say go to page 11 of the presentation showing 2014-2018 identified organic growth opportunities. Take note of the 5-7x ebitda multiples on the "all-in" growth. Cumulative projects are over $1B and I suspect more projects will be announced over the next few months.
My hope is CMLP will spend 2014 digesting and growing and then they look to do a Crosstex/Devon type transaction which has completely changed the midstream MLP/upstream E&P corporation relationship.
My hope for 2014 is CMLP can reach investment grade status but first must establish $500M of ebitda on an annualized basis.