Activist Investor? Jack Ma
Yahoo owns a part of Alibaba, but Alibaba can control what Yahoo does, and will.
Back to back sell off after earnings strike one
Sold auto seat division to chinese buyers, chinese always low ball american companies strike two
Now BE (Heating/AC) division reported lower margins strike three
I sell and look for companies that are doing things well, JCI needs to do better IMHO.
Marissa will be given her golden parachute in time. When Yahoo is bought out by Alibaba or Softbank, they will sell off Yahoo USA to some one like FB, AAPL, GOOG, or MSFT, then they will send Marissa packing with suitcases of money.
• Cons, Unknowns. In addition to the upfront DCF dilution, leverage at a combined KMP would likely be
over 5x, potentially endangering the partnership’s investment-grade credit rating. We also don’t know what
the tax implications of a KMP/KMI buyout would be for Mr. Kinder and other shareholders (a large tax bill
might make it a tough sell). Further, KMI shareholders (including management) would presumably want to
be kept “whole” on their annual cash flow (from KMP distributions versus KMI dividends). Also, we’re not
sure that KMI shareholders would want to own MLP paper (see ETE’s purchase of SUG). Finally, eliminating
the GP would be bucking the trend right now. The value of the GP currency continues to grow and the
optionality afforded by a GP, in terms of effectuating M&A and benefiting from it, is highly valuable.
Management would likely think long and hard before giving that up.
• Another View--Maybe The Current State Of Kinder Morgan Isn’t So Bad? While the MLP investor
market is fixated on Kinder Morgan’s relative under performance versus the broad MLP indices and the GPs
(for KMI), perhaps there’s another way to view this. Kinder Morgan’s (specifically KMI) size, liquidity, and
breadth of operations appeals to a broader audience of investors. Perhaps it’s just reaching a new state of
maturity. The growth rate might be slowing but the value proposition is still there relative to other dividend paying
energy corporations. Perhaps the right comp group for KMI is really Chevron, Oxy, Shell, Exxon, and
ConocoPhillips (as examples). These companies have delivered median 45.1% dividend growth over the past
three years versus 44.8% for KMI. KMI has generated a 43.9% total return over the past three years
compared to a median of 31.6% for energy majors listed above and 51.9% for high-yielding stocks in the
S&P 500. So maybe management will do nothing and simply recognize that they’ve “graduated” to a different
Yahoo message boards have there issues trying to post more from Wells Fargo
• Restructuring--What Does That Mean? The basic options to “fix” the cost
of capital are well known at this point. KMP could acquire KMI and eliminate the
IDRs. KMI could do a reset of the IDRs. Or KMI could do a partial reset, reducing
the IDR max tier (e.g. 25% versus 50%). Management could also take KMI private
and restructure the IDRs within a private vehicle, making it a bit easier to
maneuver. To be clear, none of these options are new ideas and we are highly
confident management has explored these scenarios (and many others) many
times in the past. Management has always been about maximizing unit/
shareholder value and we don’t think that’s changed. The only question in our
minds is this: Will the underperformance of Kinder Morgan and the cost of
capital disadvantage finally drive management to take some sort of action?
• Restructuring Pros. We won’t go through the math here on a potential KMP
buyout of KMI other than to say it would appear to be highly dilutive (on the face
of it). The benefits would be fairly obvious: a lower cost of capital, better
alignment of management/unitholder incentives, and potential acceleration in
the distribution growth rate longer term. A lower cost of capital would also allow
KMP to avoid undertaking higher-risk organic growth projects and also help
support previously uneconomic acquisition/M&A opportunities (e.g., KMP
acquiring EPB). But if it was simple, Kinder Morgan would have done it already.
• Kinder Morgan! Renewed chatter of a potential restructuring of the Kinder
Morgan family of companies dominated discussions this week in MLP-land.
Kinder reported softish Q2 earnings but announced potential natural gas and
NGL pipeline projects that could add $8B to its backlog. However, the real story
was management’s commentary during the earnings Q&A session, which
indicated that Kinder is open to a potential restructuring transaction.
• The Issue. Wall Street (and management) have been ruminating on potential
options for Kinder Morgan to improve its valuation given the lag in performance
relative to its peers (and the overall sector) since the beginning of 2013. While
there’s been much noise concerning maintenance capex, CO2 earnings, etc., the
crux of the issue is simple, in our view. Kinder has been the greatest victim of its
own success in utilizing the MLP structure to grow. The result is (1) a high GP
burden (44% of total distributions go to the GP), which increases its cost of equity
and reduces accretion to LP unit holders (all else equal), and (2) the company’s
large size, which makes “moving the needle” on growth more difficult.
Questions about “cost of capital”... or in other words doing something to boost share price by cleaning up the structure of KMI & KMP & KMR & EPB. Rich says he is always exploring all options about the potential of fixing this. But then again this is basically what he always says.
Lower share price increases cost of capital since when company raises cash it does a 50/50 ratio between debt & equity. Lower share price therefore increases shares needed to raise capital.
Q: Barron's has questioned how MLPs account for maintenance capital expenditures, including Kinder Morgan ( KMI ), which Tortoise owns. What are your thoughts?
A: You have to be careful: What makes up that distributable cash flow is operating income or Ebitda. You start with Ebitda, you back out interest expenses or your debt burden, and you back out maintenance capital expenditures. That leaves distributable cash flow -- what's available to pay out. There could be an inherent conflict of interest: Management may want to skimp on maintenance capital expenditures because that would increase what is paid out -- distributable cash flow. If a management team is trying to cut corners, cut the maintenance capital expenditures, you could have an issue. We ask: Have the companies reinvested appropriately? Have they accounted for it appropriately? Have they disclosed appropriately to investors? We invest in managements that are running assets for the long term.
Johnson Control Could Jump 20%
Industrial conglomerate Johnson Controls is wheeling and dealing its way into more-profitable businesses. Why the stock could jump 20%.
Despite investors' recent infatuation with corporate deal making, Johnson Controls ' May disposal of its auto-interiors business didn't generate a lot of love. The low-key Milwaukee-based company put 95% of the business—think dashboards and overhead panels—into a joint venture with a unit of SAIC Motor, China's enormous state-owned car maker. Johnson's stock didn't move much in reaction, but it should have. The transaction gives added credibility to Johnson's vow to manage its capital more aggressively, a commitment that could have a very favorable long-term effect on its share price.
The deal gets Johnson Controls (ticker: JCI) out of the day-to-day slough of operating in a low margin, slow-growth business and gives it with a 30% stake in a division of SAIC (600104.China). The joint venture will have about $7.5 billion in annual revenues, margins of roughly 6%, and top-line growth of 8% once it gets underway in 2015. (The Johnson unit was losing money.) It will have 15% of the global interiors markets and 25% of the fast-growing Chinese market, the company estimates. "That's where the new-car buyers are going to be," says Alex Molinaroli, who has accelerated the pace of activity at Johnson since being promoted to president and CEO in October.
Johnson will also get a sizable annual dividend—expected to total $100 million in the first year.
Adds Chief Financial Officer Bruce McDonald, "We've really changed the profile of our interiors business from being a disadvantaged business that was in low-growth regions with a high cost base" to a global company with access to low-cost tooling, manufacturing equipment, and thousands of engineers from low-cost countries like China and those of Eastern Europe...
Well since I owned this "dead money" mlp for 10 years. It has become a pretty darn big pile of money. Without stating exactly how much I have, I will give an example.
I buy this "dead money" mlp instead of buying bonds.
I own KMR so my distributions in reinvested. Over 10 years bonds make 2% per year and KMR distributes 8% plus an additional 4% in growth via increased distributions
$100,000 at 2% for 10 years is $121,899
$100,000 at 12% for 10 years is $310,504
Darn BIG pile of "dead money after 10 years.
The news today for CRZO is a new presentation available at CRZO website. Chip Johnson talks up CRZO's Utica play with condensate. CRZO is a small company so a big well (Rector well) can move the stock price, as in today's stock price being up about 5% to 60.
When is the last time this company increased the distribution?????
How many MLP's have gone so long without increasing their distribution????
The answer is likely LINE is in the BOTTOM 10% bracket.
That is the group that fails in most people's books.
Made money on this dog, but had the common sense to trade out of it for BBEP,
a MLP that can increase their distribution every year.
That is what well managed MLPs do.
Do you want to invest your money in the worst in class or do you try to find something better?
LINE failed to raise any cash in this deal. Looking to sell assets and cannot get any money for them. The best they can do is horse trading. Swapping their junk assets for another company's junk assets. LINE is such a bad trader that one assumes that LINE shareholders will suffer once again.
You bet I am still here. Chip Johnson is my hero. It does matter what price you bought in at and I will do some bragging. Got in at $21.50, and sold dogs like APA and DVN to own CRZO
Already own too much oil like stocks. Own BBEP, swapped out of LINE another dog for BBEP.
Have owned KMR for years. Probably too much oil for in my portfolio. But Kinder Morgan's business is mostly pipelines. Oil accounts for about 12% of Kinder Morgan's DCF.
Doing simple math
CRZO 7.2% of my portfolio
BBEP 4.7% of my portfolio
KMR 36.9 % of my portfolio but only 12% of that is oil
Therefore 16.3% of my portfolio is oily.
All 3 companies are best of breed imho.
Johnson Controls Inc. (JCI) plans to spin off its automotive-interiors business into a joint venture with China’s Yanfeng Automotive Trim Systems Co., which will be the majority owner.
Johnson Controls, the biggest U.S. auto-parts maker, will retain its seating business, spokesman Fraser Engerman said in an interview. Yanfeng will own 70 percent of the new Shanghai-based venture, with Johnson Controls owning the remainder, the companies said in a statement. It will have revenue of about $7.5 billion, according to the companies.
• Summary: Last week, we hosted Carrizo management on investor meetings in
multiple countries across Europe. In attendance were Andy Agosto, VP, Business
Development, and Jeff Hayden, VP, Investor Relations. Overall, we would
characterize the meetings as positive and were impressed with management’s
confidence in their ability to deliver on their 2014 guidance. While recent
outperformance (17% vs. the EPX YTD) led some to question if they have already
missed the move in CRZO, we believe upside potential remains for several
reasons. The company is poised to put up 50%+ oil growth 2014 in our view, and
should fairly easily repeat that growth in 2015 if the company chooses to add an
additional rig in the Eagle Ford--this is our assumption and we are now modeling
50% yr/yr crude growth in 2015 vs. the Street’s ~35%. And this growth should
not come at the expense of the balance sheet: we still believe Carrizo will be able
to maintain a net debt-to-EBITDA ratio under 2.0x, which is a self-imposed
target. Further, potential downspacing, additional formations, and expected well
results offer potential catalysts in the Eagle Ford, Niobrara, and Utica over the
coming quarters. Lastly, we think Street models still have to be trued up for a few
items, including interest expense savings if management chooses to refinance
their 8 5/8s bonds, which become callable this August. Based on details laid out
within this note, we are adjusting our 2015E EPS to $4.7