After withstanding a 10% bashing after yesterdays earnings release, MWE is now trading at levels not seen for 30 days!
Sorry, but what the hack are you talking about? Did the meltdown leave you with a high fever? Is AAPL "safer" at $100/share than it is @ $520/share? If so, then this can be said about any co. Yield is a ratio, not an absolute as is the price or distribution. Does this imply that MWE was a "safer stock" in '09, selling at $7 and yielding 30% plus?.......I think not. Although I don't agree 100% with your optimism, I can enjoy it!
Using hind sight we could all be analysts with 100% accuracy. We love to root for the home team so rosey and unrealistic predictions are received with adulations while a negative thought or post is readily dismissed as BS by those who feel otherwise. I don't know if you follow RIG or not. Some years ago it was booming, price was $120/share, next year earnings were supposed to be over $18, target price was $180/share...EASY MONEY! It was covered by at least 20-30 analysts, all in agreement. I made a sizeable purchase only to see the price below $90 in no time and all the analysts were lining up with their own excuses for missing the boat.
This board is composed of similar people/thoughts. "On it's way to the moon, $120 per unit, a triple from here, etc., etc. CS says...". while negative posts are written by "bashers, shorties, etc". I felt we were a little extended a week or so ago but I wasn't expecting this. None the less, a 5.5% yield and slower growth gets you back to $60/unit. To all of the posters on this board, Thanks....you do keep it interesting and well informed, one just needs to be able to separate the wheat from the chaff.
Looks like we got a dose of reality today, not in a bad way but way overdue. Looking at the DCF and coverage ratio, we got another 1 cent PR increase which I expected given the CAPEX we're seeing. It seems a little simplistic, but it "costs a lot of money to be the firstest with the mostest".
I saw no indication during the call that MWE wanted to be anything but the best and the biggest with regards to Marcellus. As I had written in an earlier post, I feel that one of the biggest threats to MWE was to agree to unrealistic demands from their customers. It's tough to just say no. To me the most important take away from the CC was that CAPEX would moderate starting 2015 and processing capacity would double over the next 5 years. It also seems that many here forget that MWE is NOT the Marcellus. Granted, the Marcellus/Utica is the primary growth factor but still only a fraction of MWE.
Increases of 1 cent/quarter equal about a 5% increase/year in the distribution in a 0% environment.
AS B&W says,
Stay the Course!
Not to rain on the party...just an observation. IF MWE increases the dist. by 1 cent per qtr. for the next 8 qtrs., the annual dist. would be $3.72 at the end of 2015. Assuming 4.5%-5% yield, a yield determined price would be between $74.5 and $82.5, and all of this in an environment of flat to increasing interest rates. Obviously the numbers for 2014 would be much lower using the same metrics. This also tells me that we may be over-bought near term. Hopefully there will be some surprises soon. CS has a very rosy picture and 1 cent increases don't get us very far.
Rick, Thanks for the correction. As a bit of trivia, HWP is still used on almost all world exchanges except U.S.
Starting to sound like a Dr. Seuss book with Yutz#1, #2 and Yutz#3. Boards are full of Yutzs who don't know the difference between APL and AAPL. Those who think the symbol for Hewlett Packard is HP vs: HWP. There, I feel better...blew off some meaningless steam!!!!!!!!!!!!!
Nice call on the "bounce". MLPL up 4.84%. Are the stars aligning? I still see the economy as being weaker than anyone is letting on and Bernanke just confirmed this. How much ammunition can the fed still have/use before REAL inflation takes off. Soaring rates will clobber everything.