This is a losing short position, I don't short, but choosing one that pays a 20% dist doesn't make sense. Would expect a bump when the dist is announced in a couple of weeks. Although eliminating the dist and buying back shares would probably be the more effective use of cash. Projecting out 3 to 5 years, this should be $15 to $20 if the macro holds up. That's a five times current price. Most won't have the patience. The unit price doesn't correlate with the co asset value.
What's the old saw, "don't confuse me with facts". Most "investors" focus on the stock price and know little about the underlying fundamentals. It's going to be hard enough calling a recovery in oil which is much less a factor than nat gas and we could be over run with gas still as oil recovers. You get a $75 oil price and gas stays in the $3 range for several years. If you think you have the macro figured out, ARP would be the last place I'd want to bet on. The only value now in the company is the hedges and the reserves value wouldn't cover the debt. The reserves are third tier.
Just good for others to know that he has no credibility. This has been a disaster for First Reserve, they have had a few of those.
More I think about it the ETC div should be fully taxable, as opposed to PAGP which is a partnership that checks the box on c corp taxation. Think ETC would have to be structure that way also and don't think it is, it is a c corp. And all divs will be taxable. Makes sense. You are right, I never did buy Kinder's decision, he let the unit holders pay the tax to step up his basis for KMI. ETE is an MLP, guess he could fold ETC into ETE, but doubt that would happen but who knows. He likes the advantage of the complexity and so far he seems to be making it work. I own ETE, ETP, WPZ and lots of WMB, soon to be ETC. I hope he keeps the GP growing. Seems to be a wizard so far, hopefully not the Oz type. I did buy more PAGP, the yield is tax deferred so like that treatment so far.
Everyone's lost a lot, your implication is a lawsuit, they made the investment. You don't have a clue. Still haven't answered my question, what other First Reserve are you referring to. This will end badly if you think you'll make short profits from here. But you don't seem to know what you're doing.
Thanks I haven't seen anything mentioned about the tax deferred character of the ETC dividend. That seems a big deal, my WMB dividends convert to dividends that were fully taxable to a tax deferred dividend. I don't understand exactly, PAGP says they are a partnership that chooses to be taxed as a C corp. Seems the PAGP form is different.
Will be interesting in a couple of weeks the reaction to the unit price when they announce the 55 cent annualized distribution and the unit price moves rapidly to $5. At least the gurus on the board will disappear.
This is the First Reserve that owns 16% of CEQP and 100% of the non economic GP interest which controls the LP. If it's not this First Reserve, educate us, who is it?
Michael France, Managing Director of First Reserve, the general partner of Crestwood Holdings commented, “As a long time unitholder in the Crestwood partnerships, First Reserve recognizes the significant improvement in bottom line results in the second quarter 2015 as a result of management’s continued focus on operating efficiency and cost reductions. This type of execution is particularly important during the period of commodity price uncertainty being experienced by the industry. Over the long term, we believe the simplification merger is the right next step for the partnership as it positions Crestwood to be more competitive for growth opportunities. We continue to support this strategy and look forward to completing the merger in the third quarter of 2015 and continuing to find avenues to support the Crestwood platform into the future.”
If you are going to be effective probably should use something relevant. First Reserve is the General Partner of CEQP and therefore responsible for the performance of CEQP, guess they could sue themselves. This is an awful short. Get to pay the 20% dist as it keeps going up. Not sure you even understand the concept of GP.
MLPs have no obligation to pay out anything, they could eliminate the dist tomorrow. REITS have to pay out believe it's 90% of income, not cash flow, not true for MLPs. CEQP still looks like an easy double from here as energy prices recover.
WMB sub $35 was a buy opp of a decade last week. The commodity price recovery will take some time, oil could dip again with the inventory overhang, nat gas, at least winter could maybe help price in ST. ETE three years from now will be viewed as the best co in the energy infra sector. The move today is sector wide. One issue for me is if Warren has all of the investment banking community on the payroll, who's left to say bullish things about the merger.
$47 is a an ETE $25 unit price. In six months, st forecasts are always a challenge, but I think ETE could be $30 by the deal closure, $56 WMB value. Probably the factor is commodity recovery or progress, which should be in place in six months.
You got it all wrong again, the div per share of WMB will be greater next year under the deal, and much more growth the years after that, wrong again. We actually diluted ETE's growth, ours under the deal is much greater, ETE's is longer growth, so wrong again. The investment community loves the deal, hedge funds do, two are on the WMB board. Great deal for WMB more growth for longer and ETE maintains high growth for longer. Win, win, the way mergers should work. And ETE is not through with acquisitions that should boost growth more, TRGP, OKE... By the time it close the street will be effusive about the combination. And energy prices will have recovered or on the road to recovery. Again, next year the div is greater than it would have been and in the meantime WMB holders are getting the dividend $2.56 that was promised after WMB merged WPZ, so current holders winning there also, your wrong on all counts. The sector took a beating, not WMB. This may be the best bet in the energy sector and the market, 7% yield plus 25% growth for a few years, what's not to like.
A 1.9% 10 T note doesn't hurt either. The sector should still grow, maybe less so, but decently over next couple of years.
You will get a K 1 since it's a partnership and is complicated but not impossible. And when you sell, the handling of gains is complicated.
ETE just traded at $23.24, that's a $43.50 value at the exchange ratio. Guess it's a good deal again. WMB will be pushing $60 when this deal closes.
You shouldn't be investing in this company, the 90% payout requirement is for real estate investment trusts, a completely different animal. And the MLP form causes lots of issues at tax return time.
Listen to what he has to say, he has longer exposure to Eddie than me.
And don't confuse a move up in the whole sector with a validation of the investment potential of ARP. Do think oil may have bottomed and $75 by end of next years. Run the nos with that price and $3 gas and see what you get.
From the deal announcement, you can't always believe the press. I've seen others say the original offer was $64 per share, it wasn't it was 1.8716 shares of ETE, wrong currency. The final offer added cash as part of the payment but the value will be the value of 1.8716 shares of ETE at the deal closing.
Under the terms of the transaction, Energy Transfer Corp LP (“ETC”), an affiliate of ETE, will acquire Williams at an implied current price of $43.50 per Williams share. Williams’ stockholders will have the right to elect to receive as merger consideration either ETC common shares, which would be publicly traded on the NYSE under the symbol “ETC”, and / or cash. Elections to receive ETC common shares and cash will be subject to proration. Cash elections will be prorated to the extent they exceed $6.05 billion in the aggregate and stock elections will be prorated to the extent the full $6.05 billion cash pool is not utilized. Williams stockholders electing to receive stock consideration will receive a fixed exchange ratio of 1.8716 ETC common shares for each share of WMB common stock, before giving effect to proration. If all Williams’ stockholders elect to receive all cash or all stock, then each share of Williams common stock would receive $8.00 in cash and 1.5274 ETC common shares. In addition, WMB stockholders will be entitled to a special one-time dividend of $0.10 per WMB share to be paid immediately prior to the closing of the transaction. The special one-time dividend is inaddition to the regularly scheduled WMB dividends to be paid before closing.