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Energy Transfer Partners, L.P. Message Board

bulletproofportfolio 6 posts  |  Last Activity: Mar 10, 2016 11:08 PM Member since: Aug 7, 2009
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  • Reply to

    I say cut the dividend to zero......

    by seasonedinvestor79 Mar 10, 2016 9:52 PM
    bulletproofportfolio bulletproofportfolio Mar 10, 2016 11:08 PM Flag

    You should look at the conversion language. The way I read it, if the distribution on common units is reduced, the amount of units available on conversion is likewise reduced.

  • I honestly don't think that the majority of ETE unitholders and WMB shareholders have any idea what is going on, so the following is my take on recent events and the ETE/WMB deal in general. I posted this on the ETE board earlier:

    I think what most people are failing to grasp is that this offering is a move by Kelcy Warren simply to buy time. This is not time for an unknown, but rather time for ETP to finish the massive capital deployment that is underway right now. That massive amount of capital is going to start generating a massive amount of cash flow starting in mid-to-late 2017, and at that point no one is going to care about what happened in late 2015 or early 2016.

    ETP is the single most important source of cash flow to ETE and ETE is going to do everything it can to protect ETP and its distribution--that's what the offering was about (in addition to protecting ETE's own distribution). That's precisely ETE's role as GP of ETP and also why it gets 50% of all of ETP's distributions as IDRs in addition to what it gets from the units it owns outright.

    WMB has the piece of the puzzle that ETE has been lacking; i.e., a big pipe to the northeast. The timing of the deal is terrible, but the deal makes sense and will be a game-changer when consummated.

    I think this is one of those rare moments where a very complex capital structure is obscuring something really obvious. Less

  • Reply to

    I say cut the dividend to zero......

    by seasonedinvestor79 Mar 10, 2016 9:52 PM
    bulletproofportfolio bulletproofportfolio Mar 10, 2016 10:15 PM Flag

    They are not screwing with the equity! You could have picked up units today at a price very close to what the insiders are going to pay and you would also get ALL OF YOUR DISTRIBUTIONS, which the insiders won't get for over two years!

    The units are yielding about 15% and I don't think the distribution is currently at risk. Kelcy may indeed be taking one for the team this time (he'll be okay, don't worry).

  • bulletproofportfolio bulletproofportfolio Mar 10, 2016 9:55 PM Flag

    ETE's unit price and attendant trading volatility haven't been rational since December. I've never seen volatility like this. One can let market sentiment (and probably a major dose of algorithmic trading) scare one off or one can use it to one's advantage.

    Look at the trading volume in ETE over the last four months, compare it to the average volume in 2014 and ask yourself: Is the exponential increase in trading volume due to a bunch of would-be business owners having a massive case of indecision or is it more likely due to opportunistic traders and algorithm driven trading models?

    When I buy a "stock" I am buying an interest in a business and I think this is a great business selling at a great price.

  • I think what most people are failing to grasp is that this offering is a move by Kelcy Warren simply to buy time. This is not time for an unknown, but rather time for ETP to finish the massive capital deployment that is underway right now. That massive amount of capital is going to start generating a massive amount of cash flow starting in mid-to-late 2017, and at that point no one is going to care about what happened in late 2015 or early 2016.

    ETP is the single most important source of cash flow to ETE and ETE is going to do everything it can to protect ETP and its distribution--that's what the offering was about (in addition to protecting ETE's own distribution). That's precisely ETE's role as GP of ETP and also why it gets 50% of all of ETP's distributions as IDRs in addition to what it gets from the units it owns outright.

    WMB has the piece of the puzzle that ETE has been lacking; i.e., a big pipe to the northeast. The timing of the deal is terrible, but the deal makes sense and will be a game-changer when consummated.

    I think this is one of those rare moments where a very complex capital structure is obscuring something really obvious.

  • bulletproofportfolio by bulletproofportfolio Mar 10, 2016 1:09 AM Flag

    Is the increase in unit count roughly 140 Million new units over the 2.4 Billion (or so) that would otherwise be outstanding if the WMB deal closes? If so, that's about six percent, which isn't too bad a price to pay to protect the distribution for two years. The deal terms are somewhat confusing to me, so if anyone could confirm or correct my analysis I'd appreciate it.

    The insiders also got a great deal and I think the preferred status of their future distributions is a bit excessive. I think many other unit holders would have jumped at a chance to participate in the offer without any preference, which makes me think the insiders got a bit greedy.

ETP
35.5299-0.8501(-2.34%)2:46 PMEDT