The biggest player in VNR ----The company itself---just announced a $525M purchase to grow the company.
That's good enough for me. I'm expecting the next monthly distribution to be announced probably after the close today. It should go x-div before the end of this month and pay me on or about Oct 15. If the price is higher I will get a unit or two less, and if the price is lower, I will get a share or 2 more.
The key word here is patience.
As long as some are frustrated, others will be slowly adding to their unit count at these lower prices while collecting the monthly distributions and/or dripping the distributions into additional cheap units. Management is paying us over 8.6% annually to wait while they build the company.
The choices we have are
1) Understand what is happening here and patiently wail while the income comes in month after month or is redeployed into additional units----or---
2) Remain frustrated until you finally throw in the towel and sell --and then watch on the sidelines as someone else receives the distributions you will lose by selling,--then possibly watching as the price of VNR start moving up when the frustrated sellers are gone-- and then last but not least your selling will open you up to a Tax obligation to reduce the proceeds you received on the sale.
Sometimes doing nothing, but sitting in a comfortable chair off the side of the road watching the traffic go by can be a lot safer than getting up and trying to cross the road while the traffic is still moving.
ITI has been buying back shares for about the last 2 years. Their recent CC they mentioned that they bought back 300,000 shares in the past quarter.
Sometimes when investments are made in companies where others are not very happy and have driven the price down, that in itself can be the catalyst to an oversized return going forward when the unhappy people are proven wrong. There are other times when everyone is happy and high-5ing each other that turn out to be at or near the top and in time for a big drop in value.
Since I am currently buying, I prefer to add to my position when others are unhappy and willing to sell to me at bargain prices. When the time comes for me to consider selling, I would look for a time that everyone is happy and the units are trading at a much higher level.
There is also the possibility that this was the intention of all the parties in the first place.The over $1 Billion price tag could have been too big for VNR to eat in one bite, so this 2 step solution was arranged. Anyway VNR will have the whole (double sized) deal with a projected 16 years of growth ahead , and they must see a lot of growth there and I don't believe they are fools.
Patience-This is a work in progress.
A recipe for investing success IMHO
And the price dip recently has helped also. I received 4.2 more units yesterday at the current price than I received 2 and 3 months ago. (And my wife gets the same 4.2 additional units in her account) And all those additional units plus the extra ones due to the dip in price are cranking out 8.5+% additional money being converted into still more units cranking out more money month after month.
Patience. I am now waiting for the new distribution announcement which should be in the next 1 to 3 days in preparation for the x-distribution before month end to be payable on or about October 15, 2014. I am not expecting a distribution increase to be announced now, but if it is---It will be more icing on the cake.
We just have to wait, and stay away from the sell button. If one sells you give the growth to the buyer, give up the distributions and subject yourself to a hefty tax bill.
Vanguard Natural Resources, LLC (VNR) (“Vanguard” or “the Company”) today announced it has entered into a definitive agreement to acquire natural gas, oil and natural gas liquids (“NGLs”) assets in the Piceance Basin in Colorado for a purchase price of $525 million from Bill Barrett Corporation. The properties consist of approximately 12,000 net acres that are currently producing approximately 67 MMcfe per day, after consideration of ethane rejection, with approximately 76% natural gas, 5% oil and 19% NGLs. The effective date of the acquisition is July 1, 2014 and the Company anticipates closing this acquisition on or before October 1, 2014.
Scott W. Smith, President and Chief Executive Officer, commented, “With this acquisition we are acquiring the balance of the working interest in properties where we first established a non-operated position in December of 2012. We will be taking over operations of 950 producing wells in a very large, prolific natural gas basin with an established infrastructure in place and multiple pipeline outlets to market our production. As the operator and majority interest owner in the assets, we can now govern the pace of development of both recompletion opportunities and development drilling projects to take advantage of positive changes in market conditions. This is an excellent addition to our Rockies natural gas platform and we look forward to continuing to grow in this area in the future.”
By taking over the operations of this deal, It will put their destiny in their hands as opposed to others. It should be beneficial for VNR.
I've been around the track with Malon and the boys since before the crash and have been doing my homework through the good, the bad and the ugly. I don't believe Malon and the boys are preparing to ride off in the sunset yet. . I believe they were blindsided in the credit crunch of 2008-9 but kept their heads and have been building for their future (and ours-as we tag along). I don't believe they are looking to build up ACAS for a buyer to take all the cream and give them a few crumbs for all their hard work for so many years. . ACAS being constantly undervalued will be hard to reach as the value keeps growing.
Malon is a risk taker that got caught personally with his $7 +M margin call. He did not give up where others might have. ACAS is being built better this time.
--- The Company intends to use the net proceeds from the offering to repay a portion of its indebtedness outstanding under its senior secured revolving credit facility.---
I would guess it is a smart move on management's part. They are extending the repayment date at a fixed rate out into the future "perpetually". It will also eliminate problems in a credit crunch similar to what we had in 2008-9. Rising interest rates down the road should not effect them either.
IMHO any time someone is willing to lend you money at a reasonable interest rate "forever" without a repayment date you should take it. And if you are in a business that pays out most of their distributable cash flow to unitholders and plan to grow and need additional financing from time to time it makes a lot of sence.
Vanguard Natural Resources, LLC (VNR) (the “Company”) today announced that it has commenced a public offering of Series C Cumulative Redeemable Perpetual Preferred Units (“Series C Preferred Units”) pursuant to an effective shelf registration statement on Form S-3, as amended, filed with the Securities and Exchange Commission (the “SEC”). The Company will grant the underwriters a 30-day option to purchase additional Series C Preferred Units. The Company intends to use the net proceeds from the offering to repay a portion of its indebtedness outstanding under its senior secured revolving credit facility.
Morgan Stanley and UBS Investment Bank will act as joint book-running managers for the offering.
But a stable price is beneficial to me. At $29.37 the yield is 8.58%. At $33.04 the yield is 7.63%. Thats about a 12.4% difference in my favor.. Since I am still dripping and buying if it is favorable to me to do so, thats what I'm doing. Thats how my portfolio grows, and I am currently getting 12.4% more value for the same dollars I spend. In reality I am helping VNR by creating a market for disgruntled unitholders that are willing to sell to me at these depressed prices.
You are right-I am right. We are looking at two different things.
I don't need an increasing unit price to make money. All I need is a stable price and continued monthly distributions that I want to purchase additional cheap units. My growth comes from additional units paying additional distributions. I have been fortunate to be able to have some securities that generate income that I currently don't need so I can let them grow. The distributions on VNR are mostly tax deferred so they grow uninterrupted by current taxes
IMHO They have performed very well for the last few quarters. They have continued to pay the distributions which keep adding additional units to my portfolio totals. Since I am not planning to sell, the reasonably stable unit price gives me more units added each month and each additional unit gives me more investable dollars into additional units for the months going forward. The traders and the "Kaisers" of the world create the dips in price every so often to provide a lower entry price when the monthly drip comes and/or a buying opportunity if the price is lower due to what they say. If Mr Kaiser really knew what was happening with LINE-KMI or VNR he would have all the money he needs in his portfolio without having to write "sage" articles tying to scrounge money from people's misery caused by his outrageous comments. If the VNR price remains at the current $29.29 until the drip day of Sept 15 I will receive 12.8% more units that if the drip price was the recent high of $33.04. And that 12.8% additional share will compound month after month. and will give me an additional 12.85 units month after month compounding again and again as long as the price trades at $29.29 as opposed to $33.04. . Since I'm not interested in selling, the only thing I give up are "Bragging Rights At Cocktail Parties"
My vote is for stable unit prices and continuing distributions that from time to time are raised when prudent.
Listen to the CC this afternoon at 4:30 PM. That will give you a better understanding if the LONG TERM potential that is here with ITI. BIG Bucks can probably be made here if you recognize the potential and play your cards right. I believe there is a lot more value in ITI shares that $2.20. I'm looking for $5 to $10 going out 2 to 5 years or so. Today's CC will give out more insight as to thefuture
The key work here is Patience.
You haven't done your "due diligence" if you are concerned what happens based on what he dreams up and how VNR trading stands up for the first two hours today. My investment time frame is 'forever" As long as management runs the business in a prydent manner and is able to pay the distributions and increase them every so often, I will continue to be invested here and drip the distributions month after month after month. The unit count in my portfolio will continue to grow month after month. The unit price will fluctuate because there are people that are concerned about minute to minute trading and base their decisions on what others do.. Price is what you pay--Value is what you get. I believe there is more value in a VNR unit than the price it is selling for.
So I continue to buy
It is now the beginning of September. It might be time to pick out the color of your wife's new Lexus for next year. she must be getting tired of the ol the old one by now.
Keep the faith. I believe The best of MWE is still in the future.
I remember the day I first bought MWP over 10 years ago because I took my wife to dinner at a local Chinese Restaurant and received my fortune cookie with the following message in it
"A financial investment will yield returns beyond your hopes"
I taped it on my computer screen and I look at it whenever it gets a little rocky out there.
Judge Learned Hand served for many years as a judge on the US Court of Appeals. He became famous in his day for his opinions and rulings of Federal Taxes .
He his probably most famous for the following:
Famous Quote from Judge Learned Hand
"Anyone may arrange his affairs so that his taxes shall be as low as
possible; he is not bound to choose that pattern which best pays the
treasury. There is not even a patriotic duty to increase one's taxes.
Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible. Everyone
does it, rich and poor alike and all do right, for nobody owes any
public duty to pay more than the law demands."
Fear brings two choices for everyone.
1) The fear of loss of money and running for the exit in the hope of reaching the exit before others and getting trampled
2) Keeping your wits about you, and figuring out how to adapt to the situation and make money out of the
fear of others.
Everyone has the opportunity to make that choice. The successful investors are the ones who make the right decisions while the poor investors will always talk about how bad their stocks were while never mentioning the poor decisions they made at critical times.
A split does not add value to an investor's position. Would you rather have a $1.00 Bull or Two Half Dollars?
The price is what you pay. The value is what you get-----Warren Buffett said that many years ago. He never split his Berkshire Hathaway stock for the past 50 years. Now it's trading for over $200,000 a share.
I have no inside knowledge, but I'll bet you a Diet Coke that they have been selling units for a week or two and are stepping up the money raising as the price increases.
Frank and Nancy didn't get MWE to where it is now by waiting for us to think about the opportune time to do anything. They know the markets and what they need.
We, as unitholders, are just tourists along for the ride,