Rather than say it is not possible, how about simply check the historical prices.
Every trading day's closing price since inception is included in a spreadsheet downloadable from the Alerian website.
If you can google Alerian then you can find it.
You are idiotic, equivalent to saying that it's impossible the nasdaq could have hit 5000 in 1999/2000. It is historical fact that ^AMZX started at 100 in 1997 and is at 1575 today. And yes, that equates to more than 15% per year compounded. MLPs have indeed been the very best investment class in the market over the last 15 years.
This is an index. Historical prices are publicly available. You can look them up. I've told you where to look them up but apparently you prefer to say it's impossible than spend 5 minutes actually verifying it.
Again, every single day's historical price is on the Alerian website. google Alerian, then on the website go to 'indices', then choose 'values' on the left hand side - it will ask you if you want to open or save the spreadsheet.
There are two indexes shown: AMZ is without reinvestment, AMZX includes reinvestment of distributions.
For AMZX, you can see that it started on 12/29/95 (OK, looks like I was 1 year off) with value 100. The daily values are updated as far as 2/28/14 with value 1568.60. You can get real time quote on yahoo, just plag in ticker ^AMZX and get this
ALERIAN MLP INDEX TRUST (^AMZX)
1,574.03 Up 5.43(0.35%) 5:07PM EST
Prev Close: 1,568.60
Day's Range: 1,562.10 - 1,575.53
52wk Range: N/A
"This is a game that most MLP’s pull soon after the IPO"
another ignorant comment. More than 90% of MLPs are still fixed/rising distribution ones, only a small number are variable distribution policy. Of the fixed distributions MLPs, very few ever reduce distributions. The refinery MLPs came out as variable distribution model precisely because the cash flow in this industry is so famously variable that it would not fit well within the fixed distribution model.
The drop in distributions in the variable distribution MLPs (NTI, ALDW, CRRR) was entirely predictable and I forecast it while distributions were still very high 18 months or so ago. That was a peak of the refinery cycle with historically wide margins. Should have been clear to everyone that these 3 refinery MLPs were coming to market right at the peak to take advantage of once in a generation conditions. The drops had nothing to do with MLP structure and would have been obvious to anyone who had followed refineries or the oil market for more than a few months. Guys like you hae only yourselves to blame for investing in a sector you didn't understand.
Yes, that is the power of compounding, and what most don't recognize is that it is an exponential function. Without doing the calculation I think that return from ^AMZX works out to somewhere in the vicinity of 15% per year (not 100% per year). According to the rule of 72, a 15% return means you double your investment every 4.8 years. So in approx 5 years you double both your investment value and the income, another 5 years and you double again, and a further 5 years and it doubles again. So that gives you the roughly 16 times in 15 years we were talking about.
Any function that increases at a fixed percentage each year is an exponential function. And with a 15% annual return that is a pretty fast exponential increase. On top of that consider that the majority of the income is tax deferred and so most of the income is available for reinvestment and this is really compounding on steroids. Easy to do, make a simple excel function which increases by 15% each year, then run the function for 20 years or so and plot the graph. Takes a few minutes to do this in excel. Look at the graph - very clearly an exponential graph with the line going almost vertical on the right hand side. That represents both the value of your investment but also the income produced by the portfolio. In my opinion, this is the real way to make big money - exponential tax deferred compounding - not trading.
The hedges will definitely go away. That could be a good or bad thing depending on commodity prices at the time. As you note, if it happened now it would be a bad thing. I don't recall offhand when the hedges disappear (guessing around 2015), but you can find out by looking at the prospectus (S-1) which will be available on the SEC website. They are sure to detail the hedges there.
In an update, GS says that of the 5 most at risk, they consider EEP the least likely to cut the distribution:
"Goldman Sachs analyst Theodore Durbin followed up on a note last week that screened for potential distribution cuts in MLPS. The report listed the 5 lowest ranked stocks including NuStar Energy L.P. (NYSE: NS), Niska Gas Storage Partners LLC (NYSE: NKA), Enbridge Energy Partners, L.P. (NYSE: EEP), Southcross Energy Partners, L.P. (NYSE: SXE), and TC PipeLines, LP (NYSE: TCP).
"Our report this week "Screening for potential distribution cuts across MLPs" garnered broad interest, as investors are appropriately concerned about cash flow sustainability following BWP's (NYSE: BWP) recent 81% distribution cut. We ranked stocks based on four fundamental financial metrics (1) historical distribution growth, (2) forward distribution growth, (3) leverage, and (4) coverage. NS, NKA, SXE, EEP and TCP were the lowest 5 ranked stocks, although we do not currently forecast a distribution cut for any MLP in our coverage universe," said Durbin.
"Among the "bottom five" in our quantitative screen, investors pushed back most on EEP given strong growth in fee-based oil infrastructure cash flows, reduced equity financing needs, and a supportive parent (ENB). From a qualitative standpoint, we agree, and believe EEP is at the lowest risk of a cut among that group," he added.
Goldman has a Neutral rating on Enbridge Energy Partners with a price target of $30.00"
Reviewing a potential transaction
In the section below we provide a refresher of LNV’s asset base.
A potential scenario. The current production base is ~6,000 boe/d (80% liquids) with
operating netbacks of ~$36/boe. In the context of the current market and precedent
transactions we believe an appropriate sale price is 5 – 6x P/CF. LNV shares have
appreciated ~20% since the financing on speculation of a potential transaction. We modeled
a potential scenario where SGY could pay a 10% premium to LNV’s current share price
(implies $5.97/sh). This would drive a total transaction value of ~$395 mln consisting of the
toe-hold equity position ($42 mln), acquisition of the remainder of the shares ($222 mln) and
the assumption of ~$130 mln of net debt. Transaction metrics would equate to 5.1x and
~$65,000/boed. In conjunction with the deal SGY could potentially bump its dividend by 12%
to ~$0.60/sh annually (10.2% implied yield) while maintaining a total payout ratio of ~90%.
The deal would be ~10% accretive to cash flow.
Next steps in a potential acquisition. At this point SGY’s management noted its intention
to work with LNV on a friendly basis. Go-forward scenarios include: 1) a pre-emptive bid by
SGY. 2) LNV commencing a public sales process. Under the current circumstances this
could take between four to eight weeks before resolution. 3) SGY could go hostile 90 days
following the release on Friday. 4) SGY could decide to walk away or sell the shares to
another party. In the interim SGY will receive $4.5 mln in annual dividend income from
ownership of the shares. The ~20% control block provides SGY a toe-hold and competitive
advantage over competing bids. We look for more colour from both companies on the
process over the next few weeks.
Comments not directed at you, then.
But multiple posters (or one poster using multiple IDs) made the statement that 100 to 1600 in 16 years means 100% per year.
With that level of math knowledge, I fear these people should really not be in the market.
And, btw, in case it's not clear to everyone, a huge factor in the great returns of ^AMZX over the years is due to compounding. This index assumes reinvestment (and therefore compounding) of distributions. Most people underestimate the power of exponential compounding. Even Einstein referred to it as the 8th wonder of the world. That compounding is an essential part of my own investment strategy.
Let me help you seeing as how you are so math challenged.
1997 through 2013 = ~17 years
During that time ^AMZX has gone from 100 to 1575 today.
If it went up 100% a year for 17 years, the index would have a value of more than 13,000,000 (slightly higher than the actual index value of 1575).
Anyone on this board took elementary school math?
"Crude oil spreads have been moving into backwardation for a while now. that suggests that supplies are becoming hard to come by. "
It also suggests that new CTFC position limits introduced in 2013 have dried up liquidity in the out dates. This in turn results in producers being unable to hedge which is causing them to lower production targets. End result will be that getting the speculators out of the market will result in increased volatility and higher prices, not just for oil but other commodities too. CTFC have indicated the whole position limits decrease was rushed and not thought through.
There is an article on SA today where Dennis Gartman explains this, however he is far from the only one saying it.
No, I didn't say 100% every year.
You are apparently as math challenged as the other poster.
100 to 1600 in 16 years DOES NOT equate to 100% per year, or anything like it..
Really, did anyone on this board pass elementary school math?
As for not being able to find a source, look on the Alerian website.
You can find daily historical quotes since inception.
Make sure to look at ^AMZX - Alerian MLP total return index.
Yes, for CVRR I have never owned units however I sold puts right from the start and roll them forward every quarter for extra premium. Premiums have been very high and so I collect quarterly income greater than the distribution without ever having to buy a single units.
"unpredictable for buying PUTS until announced."
Dummy, I sell puts, don't buy them. Roll forward every quarter for additional premium.
It's like collecting a distribution without ever having to buy units.
The hedge contracts existed at trust inception. My point was that it is not allowed to add new hedges. So after the initial hedges expire there will be no further hedges.
And yes of course drilling is done by the operator company, however the trust has no influence over that. The operator company makes all the decisions.
This thread arose from someone suggesting that NDRO management should make a statement. My reply to that stands...NDRO has no management (not even a single employee). The trustee is a bank employee who acts as trustee for a dozen or more trusts on a part time basis. NDRO, the trust, has no say over any operations decisions. All the trust does is collect royalties and pass them on to unitholders.
Those were existing units owned by the sponsor company.
Those units were already paying a distribution - the units simply changed hands from one owner to another.
US trusts are not allowed to increase units.
Of couse, a big block being sold like that creates downward pressure on the unit price but it in no way changes the cash per unit available for distribution. So unless you planned to sell around that time, it is really of no consequence to your investment.
That is silly.
A number of stocks went to zero during the flash crash too - does that imply those companies suddenly became worthless for a few hours?
Any traded security can collapse when everyone rushes for the exit at the same time. As for oil, it was back in the $60s within a few months of that crash and has been trending higher every year since then.
Hope you do not invest real money with that level of math.
P.S. All the index constituents as well as daily historical prices for all the Alerian indexes since inception are listed on the Alerian website.
Be sure to check the correct index - we are talking about ^AMZX, the Alerian MLP total return index.
who said I owned it? I never owned units.
I trade the puts and have made a lot of money from it.
" I understand LNV's reserves would be accretive so Surge."
That depends entirely on how much they pay.
If the price is higher, it would no longer be accretive.
Limiting commodity trading is already leading to higher prices.
Read the articles about how position limits is leading to lack of liquidity in the forward strip, leading to backwardation in commodity futures, causing producers to be unable to hedge and so scaling back plans for production increases. Taking the speculators out of the market only serves to increase volatility and reduce production. Many producers will not increase production if they are unable to hedge. It was the speculators who made up the other side of those hedges and now they are being forced out due to new CFTC position limits. Even CFTC has made a statement that the position limits were not thought through well enough. They are going to hae to backtrack and allow the speculators back into the market.
irrelevant how much it costs to build when the pipe is in the wrong place relative to current supply and demand locations. They can't just move the pipe across the country to where it might be needed.
You are right about one thing - I am not a trader.
Because it is not the way to build wealth.
You may win a few, lose more and have your money locked up not returning anything for long periods.
On the other hand, my income portfolio delivers over $300k (and rising) cash into my portfolio each year without me having to do a thing. And if I reinvest that income I get exponentially increasing portfolio value and cash income.
Your idea that trading is the way to make money shows who is the rookie. I can enjoy myself, don't need to make any decision yet still the money keeps flowing in. And the best part, it is mostly tax deferred...I pay hardly any tax on my investment income so it can compound exponentially free of taxes.
Do yourself a faor and learn about exponential compounding...Einstein called it the 8th wonder of the universe.
Oh, and by the way, your trade has gone against you again, just like last time. Which no doubt means we have to spend another few months listening to your idiotic tirades until you are able to get out breakeven again.