As an income security it is distribution increases that lead to higher price.
For the price to go up without distribution growth that implies yield compression.
But if the distribution is raised, the price will tend to rise just to keep the yield steady.
sure, glad to oblige. Zacks is a computerized model which doesn't understand the differences between stocks and MLPs. So you can pretty much ignore any rating (sell or buy) that Zacks puts out on an MLP.
Best reason for going down is that the yield is very low even after the drops. That may mean that not everyone has internalized that distributions are going to be at the new rate for quite a few years. As people give up on distribution increases the price may fall further.
I don't really see if going up for some time (couple of years) but the best reason is probably that the DCF is much higher than the new distribution level.
My guess is that BWP stays in this range or drifts slowly lower (not considering any major events in overall markets) for quite some long time, like a couple of years. If anyone is interested in buying, they probably have a buying opportunity lasting several years. And since the yield is so low, why would you feel any need to hurry.
I added at just over $5 in the first collapse after the distribution cut, then watched and waited as the price rose in the wake of the RGP deal and then subsequently fell again. A couple of weeks ago I added some more I think around the $4.80 area. My holdings from earlier were purchased in the $3's back in the earlier collapse from a number of years ago and those units were at zero basis already before I just added.
So management have been terrible but I don't mind nibbling when the price gets low. Hopefully they can maintain the new lower distribution although we haven't heard much from them in the way of acquiring properties. I would not back up the truck though as I still see this as quite risky.
"MLP's are not gainers."
Another silly comment.
The Alerian MLP index (^AMZX) started in 1997 with a value of 100.
Today's quote is 1575.
MLPs have been the biggest 'gainers' of any asset class over the past 15 years.
y'all should have listened to me. When you were all giddy about it going to the $6-7 range after the asset disposition I warned it was irrational and wouldn't last. Being forced to sell your best assets is nothing to get excited about, it's akin to losing your house through foreclosure but being able to keep your car.
My next buy point would be in the $4.50 area.
you don't agree that increased distribution with no change in price results in a higher yield?
or that for the yield to remain steady when the distribution goes up that the price would have to go up by a similar percentage?
Hey norris, perhaps you are unaware of this formula:
yield = annual payout / price
which implies that if yield is to remain in line with peers then:
total return = current yield % + expected annual distribution % increase
It's simple math and is pretty much the basic equation of dividend growth investing and norris thinks it delusional babble.
also you get tax deferral if held in a regular account, an advantage which is wasted if you place it in an IRA which already has tax deferral. Keep the MLP in the taxable account, keep other non-tax advantaged investments in the IRA. That way you get deferral on all your investments.
Really you think many buyers have less than $67 to invest?
What percentage would brokerage commissions be if you are investing less than $70 at a time?
I think you are totally confused. There has been no announcement yet. Your last couple of sentences are total nonsense.
The entire pharmaceutical and medical industry is highly dependent on oil.
Hypocrite. Do you use modern medicine?
Come on, almost always the acuiring company sells off briefly on news of the acquisition, even when the deal is accretive like this. E&Ps have to keep acquiring new properties to replace old depleting ones, so this is part and parcel of investing in the sector. I am happy with the 9% increase in the dividend which will come on closing of the deal. Who cares about a temporary 5% drop in price?
Wells Fargo downgraded Eagle Rock Energy (NASDAQ: EROC) from Outperform to Market Perform with a price target of $5-$6 (from $7-$8).
Analyst Praneeth Satish said, "EROC reported Q4 DCF results below our already conservative expectations (we lowered our estimates for the quarter on 2/26/14). While a significant portion of the shortfall (relative to our original forecast) was attributable to weather-related disruptions, the remainder of the variance was attributable to higher operating expenses, rising maintenance capex, and higher interest expense." "Although we continue to expect EROC s balance sheet to improve meaningfully following its transaction with RGP and the partnership to re-lever its balance sheet with a debt-financed acquisition, we now anticipate accretion from this acquisition would be used to bring EROC's coverage ratio back to approximately 1.0x rather than support a distribution increase (i.e. our prior thesis). Consequently, as a low-to-no growth, natural gas-focused upstream MLP, we believe EROC could trade at an 11.5% yield (implies a valuation of approximately $5.20 per unit). We are lowering our valuation range for EROC by $2 to $5-6 per unit and our 2014 DCF per unit estimate to $0.59 from $0.61," he added.
same thing applies to all the questions about when is the ex-date.
Beats me why people don't check the press release which would be faster and more reliable than posting the question on a massage board and waiting to receive multiple, possibly contradictory responses.
It's like people asking on a message board what the weather is like today rather than looking out the window.