ARB: At this point in time I am prepared to wait out the slow growth future you expect over the 2014-2016 time frame. It would be not in my best in my long term plans to be happy or satisfied with a potential sail at this time for the following reasons
1) It would trigger a huge tax event that would not be acceptable even if the sale was for the numbers you suggested.
2) I believe MWE is worth more a few years out .
3) I would have to give up a very large income stream that couldn't be replaced with the net after taxes proceeds of a sale
4) Anyone offering the $100-$110 price you mentioned just corroborate my thinking that MWE is worth a lot more in time--Either in unit price-increasingly growing distributions or both.
I appreciate your posts and am glad you continue to do so. Don't get distracted by those that disagree with you. The more we know and learn, the more our investment will grow.
My PSEC shares are in IRA's at TD Ameritrade also. And Yes the dividends are paid on full and fractional shares to three decimal places. In addition you get the extra pennie if the dividend is over 1/2 cent and you get the additional amount if the fractional share fourth decimal is over 1/2. the reinvestment price is a crapshoot though, sometimes it is good and sometimes not. The best part is there is no commision charged on the transaction. Also since I'm not planning to sell in the near future, the current dip in price is beneficial to me, because I am getting more shares for the same money each month and they keep paying more dividends on the addition shares I receive each month compounding the share return above the current 12+% per annum.
MSNAPP: I gave no timeframe. You said two years.
taking Buffett cash might not be good for you-But it definitely will be bad for me.
I won't be able to invest all the proceeds elsewhere because I won't have all the proceeds to invest to return the same income I have now. I would have only a Percentage of the proceeds left and that would buy me only a per centage of the current income I have now. Less income is not a goal for me. Thats also why I am not interested in TSLA or FB If they went to $5000 a share tomorrow it wouldn't bother me because I wouldn't own it. I probably wouldn't have bought Tulip Bulbs back in the 1600's. I know I didn't buy ENRON Lehman Bros, and all the other darlings of the 2000's and 2008-9 era.
------I'm only saying that profits can be invested elsewhere.----
Wrong-Only the net cash remaining after taxes can be invested elsewhere. and in my case that would give me a much lowered annual cash return.
Companies can refuse toi sell. When MWE was buying out MWP (their GP) there was a $10 higher offer from Targa that was rejected by MWE. Many offers are made and rejected all the time . Buffett does not do deals that are hostile and I doubt if Frank Semple and John Fox would be willing to pay 40% or 50% taxes on thier holdings to sell MWE.
Do you really think that Semple and Fox are taking MWE on the long term growth platform that they are doing, so that they can throw up their hands and give it all to Buffett.
I truly doubt it.
Akebono: being on the Warren Buffett gossip column doesn't make me happy. Buffett likes to buy for cash. A cash sale would be counterproductive for me.
1) it would trigger huge tax obligations for me
2) It would deprive me of a large income stream.
3) Even if they could work out a tax free deal for stock--His stock pays no dividend or distribution which would cause me to sell a portion or all to replace the income and pay the same taxes.
4) Give up all the growth that we have been waiting for, for thew past few years.
5) Warren Buffett is no dummy. If he gave us as much as $90 which would be a 40% premium to the current $65 price we all know it will be worth about $125 to $150 going out the next few years with little if any taxes while we hold.
The difference is-Do we accept the increasing distribution while we wait for the $100 to $150 price coming down the road---Or do we sell out now, pay a big chunk out in taxes, give up the increasing distribution stream, and let Warren Buffett make all the money that we know is coming.
ARB: I'm sorry But Dreiser being right or wrong has nothing to do with your Grandkids being through college. Maybe MWE is not the right investment for you anymore. Times change. It appears Frank Semple has a longer time frame in mind for MWE than you or Drieser has.
Hi ARB: Yes this will cause a lot of the momentum players to go away and play somewhere else. Frank Semple stated on page 8 of the transcript the following:
----"You can rest assured that we're very,very focused on returning to top quartile performance, which as I said earlier, requires us to not only raise distribution by $0.01 a quarter, we need to get to $0.02 a quarter and ultimately $0.03 a quarter AND BEYOND.. And we can, if you think about the math around our DCF capability, given the significant amount of growth projects that we have out in front of us and CapEx starting to moderate, to really king of flatten out and significantly decline over the next several years. But we do not want to miss the opportunity in the Utica and the Marcellus to continue to capture significant market share based on out capabilities, based on out relationship with the producer customers and based on the sheer growth of those shale plays. That's a long short question but yes, we are very very focused on continuing to raise our distribution and we believe our business will support that."----
Hi Dreiser: I've mentioned here a few times recently that it would be wise to start thinking of MWE investing as multi-generational investing. About 5 years ago, Governor Ed Rendell of Pennsylvania said it would take about 50 years to build the infrastructure for the Marcellus. Frank Semple grabbed the ball and started running, and is in the process of creating a lot more than just an investment for now. We, as investors, saw an opportunity and we decided to tag along. Now the momentum has been increase. How much?
In MWE's December 2013 presentation at the Wells Fargo 2013 Energy Symposium on slide 15 MWE lists 21 Major Projects Completed in the Marcellus and Utica with 18 Major projects under construction.
On Feb 27 2014 MWE's CC presentation on slide 16 MWE lists 23 Major Projects Completed in the Marcellus and Utica, with 19 Major Projects Under Construction.
So it appears in the past 2 months 2 Major Projects have been completed and an additional 3 major projects announced and construction has been started.
We do not know what else is planned but not yet announced.
So, what do we know? I know that the last time I looked Frank Semple owned over 700,000 units of MWE and John Fox owned over 7,000,000 units of MWE.. They have stated they are committed to the continued growth of the distribution. Frank said in the CC he wants to get back to the .02 -and .03 and "MORE" per quarter increases.
This will take time. Probably more than we thought. But thats because we weren't paying attention when Gov Ed Rendell said it would take about 50 years to build out the Marcellus infrastructure. At the beginning Frank needed a partner to help finance the marcellus so he joined with EMG. Then when he saw how big the Marcellus was going to be he bought them out before it got bigger and would cost even more than the $2B he paid, and then made a new deal in the Utica with the same EMG for them to start the buildout while MWE built the Marcellus.
There will probably be a lot of arguments about what stocks to pick with a group of 25 people. That will mean more work and less positive results. IF you are really serious about wanting to make serious money and you have confidence in PSEC invest your $2000 in PSEC and drip the monthly dividends. You can buy about 181 shares to start and the first dividend will be about $19.97 dripped into additional shares at about the current price will give you about an additional 1.808 shares. Also add about 20% of your income each paycheck and if you are young enough and PSEC doesn't do anything stupid and the world doesn't end you can have your retirement nest egg all ready for you. The more you put in the more you could have. $1M $2M $5M it all depends on how much desire you have to make it, and most important THE COURAGE TO DO IT.
Hi Money: Frank Semple said on the conference call (Subject to the BOD approval going forward) He visualizes a .01 distribution increase per quarter into 2015 and then a step up to .02 per quarter. Assuming everything goes according to plan at a pennie increase for 8 quarters and .02 for 4 quarters we would receive $11.20 in distributions and we would be at $1.02 quarterly distribution. He also mentions .03 or per quarter increases going forward. I believe selling now is counterproductive because it creates a big tax event and in affition deprives the seller of growing tax deferred income quarter after quarter.
NMB: Any splits or spim-offs or 'rearrangements" will create the catalyst for the "sum of the parts" to be greater than the "current whole"
All we need is patience on our part, amd a co-operating market enviornment on wall street's part.
I have 10 Baskets that produce Eggs and Growth for me on a regular basis. I can't keep track of any more than that. I've tried but it doesn't work for me, because I have to find more companies in the same catagory and therefore I dip into 2nd tier securities that I'm not satisfied with them, and I end up selling them, so I have additional transaction fees and taxes to pay and I get distracted from my primary objective which is to keep it simple and let them keep working on my behalf.
I don't really do much but wait and wait and wait some more.
it might sound boring to others but it's lucrative for me
Icon: ---Taxes are relatively low now. Maybe this is the best time in a century to take profits.--
Judge Learned Hand (1872-1961) a long term judge in the US Court of Appeals had this to say about taxes in one of his famous opinions---
"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."
---"If I sold it now and took the cap gain, what could I get reinvested elsewhere?--- Don't forget the concern as to whether the new investment willl deliver the returns in the future you invested for. Right now, PSEC is a known entity to you,that is churning out the money month after month
The problem arises when an investor gives up a winning position with the intentions of re-buying on the expected pull=back that doesn't come and then gets stubborn and watches the stock continue to rise without re buying leave him on the outside with no stock and with a tax obligation to further add insult tp injury.
Postponing tax obligations are an important metric of improving investing results that many people don't pay enough attention to.
Maybe the volume would be easier to understand if you assumed that it is by people that are as uninformed as we are and they are just looking for an edge the same as you and I. We wake up Monday morning and at *:00 AM the futures on the computer are up 50 points because an obscure event like Tasmania decided to lower their prime rate from 43% to 40.5% and the talking heads on CNBC on one of their round table meetings on Larry Kudlow Friday nights program decided after heated debate that they would kower the rate to 41.5% So these bullish conditions rocked through the financial markets over the week-end and investors are ready to pounce on this news You and I can visualize the growth coming and decide this should make ACAS rise and we place orders a few cents above Fridays closing And indeed the market opens strong (Remember Tasmania ia a world financial leader) and ACAS among others starts marching up nickle after nickel and the volume pours in as ACAS trades higher and higher .30 .40 .50 .60 and the Dow trades up 200 250 points and everyone is toasting marshmellows around the campfire singing Kum-by-yah and then you and I realize- Who the hell is Tasmania and what do they have to do with ACAS being up .60 so we sell and we are happy and so is Uncle Sam because he wants about 30% to 40% (plus the 3.6% surtax) Thgen others realize its a bunch of nonsence and sell Some come out ahead and now owe the government money. Others don't do as well and lose and they can add their loss to the long string of tax loss carry forwards they have piling up faster than the $3000 per year they can use.
I don't consider that being investing- IMHO THAT IS GAMBLING.
I prefer to sit and wait and most of the time do nothing but wait some more. I believe more serious money can be made in just waiting and watching.
Leny: Trying to figure out penny by penny what others are doing is IMHO a waste of time.
This is a much simpler way for me. Management and their plan of action.
I believe management is excellent.
And I believe their plan of action going forward will create more wealth coming into my pocket for my family and myself.
I believe all the rest is "Just Street Noise" created by people that are trying to micro manage this company and in so doing many times leave a lot of money on the table for others and get too stubborn to admit their mistake and buy back in when the share price lifts off the ground and leaves them wondering what happened? Who really cares what happened --If you believe in management and their plan of action going forward this is a no-brainer.
Hi Bramah: MWE is A publicly traded Master limited Partnership (MLP) and not a stock. P/E is not an important metric with partnerships. The Important metric is Cash Flow to pay mostly tax deferred cash distributions to the partners. You should know this before you invest in partnerships, because it is important to know what you are invested in and the ramifications tax wise of those investments.
I'm still dripping the dividends every month, so the income keeps rising as the additional shares start bringing in additional revenue each month.