SC4, I have a bunch of closed end munis. I try to stick to the ones with the largest discounts to NAV. You can find the symbol for the NAV by inserting an x before and after the stock symbol. The WSJ also posts the discounts and there is a nuveen site with that info. There are some Van Kampen funds trading at close to 10% discounts and yielding in the mid 6's.
As the 10 year has moved up in yield, many of the munis have sold off some, broken through their 50 dma and approaching their 200 dma. There has also been much new supply of muni bonds hurting prices. I have been a proponent that the Fed can't raise the Fed funds target because of the amount of excess reserves still in the system and that the economy will weaken, but today I saw a WSJ story on increased bank loans to business so perhaps the economy may get stronger after all.
SC4, I own ETE from way back, but I also added some in the $50's. I think I saw that one of the brokerage firms had a $95 target on it. You could do like Kee does and own both ETE and ETP, one for growth and one for income, but your total return will likely be higher with ETE. Also, you never know when ETE will take another run at TRGP and NGLS.
I've been in this since it was spun out and while they did raise the distribution over time before the recent cut, the stock price declined from $28 to under 20 even before the industry cratered starting last October. So I wouldn't exactly say that the PPS was maintained. The chart definitely has a downward slope. Perhaps it's time to invest in those reading glasses.
I would not call it a red flag. Partnership taxation is very complex. As I recall from a long time ago, limited partners have an "inside basis" and an "outside basis" or a basis attributable to the assets of the partnership and a basis attributable to the partnership as a whole, so one's individual gain or loss will depend on when they owned their units and at what price.
There might be more general tax discussion in one of their original prospectuses.
What? Increased their dividend and maintained their PPS? So that cut from $2.40 to $1.30 is a raise and I'm just misreading it?? That decrease in share price from $28 to $7 was a split that I missed?
Just the same, would you believe anything that they projected? Remember their projection when they filed their SEC registration statement in connection with the spin off and then 2 weeks later reduced their distribution. Like they didn't know ARP was going to be forced to cut their distribution.
Bayman, I might wait on WMC as it is nearing its highs and the risk of an spo increases. It's been some time since their last spo, which I think was last year and the book at quarter end was $14.55ish.
That's a good question and probably worth calling them. I thought I might have read on some other boards something about unitholders on the last day of the month are attributed the income and gain for that entire month.
It sounds like you are trying to avoid the gain that will be attributed to unitholders. I believe the gain will be reported as a long term capital gain, in which case it should be reported in the appropriate box on the K-1 and flow into your Schedule D where it will be taxed at your long term cap gains rate.
The risk of trying to avoid the tax hit from this sale is that they announce an acquisition with the proceeds after you sell your units and the stock price pops by more than the tax hit you would have avoided.
I was watching SBUX back when it was $80 pre-split and as usual, just watched it go up. It has run quite a bit, but is still in an uptrend channel. It got my attention when it was mentioned for its high dividend growth rate. It will probably be like KO was over the years, always selling at a high pe multiple and increasing its dividend, but never selling at a high yield because the stock price will keep moving up with each dividend raise. Just the same, even these types of stocks can go sideways for a bit as they need to grow into their multiples and they are also susceptible to market selloffs.
SC4, ETE's distribution has gone from $2.04 per share at the end of 2008 to split adjusted $3.92. So that's almost a double in 6 years which based on the rule of 72, means the growth rate is about 12% per year. The stock has quadrupled. It's not that they pay so little, but rather the growth is so high that it produces an outsized gain in the stock price.
pale, there was a blog on the stock charts site whose method involved buying only those stocks that were over their 50 dma. She bought when the stock was under the 20 level on the slow stochastics and sold if the stock went over 80 and then dipped below that level. One can easily backtest it to see if it works. For the few that I have checked, it's pretty good. I'm more of a buyer on fundamentals, but I've found you have to know the technical picture so that you don't buy too dear or sell too cheap.
SC4, you hit it right on the mark. Kelcy's money is in ETE., meaning he would be a buyer, not a seller. They will do another MLP with the Lake Charles LNG unit, so that will be more IDRs for ETE. I think he might have a few targets left before setting sights on any of his own children. Someplace somewhere there has to be a map, by product type and by geography, that lists all the pipes and lines. Then it's just a matter of matching up who needs what.
I've been thinking about ETP lately because it has sold off and the yield is up.
Vin, we don't discuss mREITs like we used to. Once the taper hit, most moved on. Some still own WMC and others are playing NYMT. In this time of the cycle, you usually see investors move to nonagency and commercial mREITs and property REITS because those companies are more sensitive to improving credit that comes with an improving economy. REM has too much exposure to those 2 companies. MITT, AMTG, TWO and others have all done better than AGNC over the last year probably because of their nonagency and commercial exposure. I added ARI a few months back when they did an spo. It's had a nice run and I may be at the tail end, so vigilance is required.
If the Fed ever succeeds in raising the Fed funds target and it sticks, that will likely created a buying opportunity because I don't think a Fed funds hike can stick (because the banks have too many excess reserves).
SC4, the tax obligation for any acquisition of an MLP by a C corp is dependent on each individuals own capital account in the acquired MLP. Generally when an MLP is acquired, it is treated as a termination of that partnership which triggers the same consequences that you get when you sell your MLP units. There could be ordinary gain, capital gain (or loss) and the deduction of any suspended losses that you haven't been able to use. Many MLPs have a function on their K-1 page that allows you to estimate the tax hit from a sale of your shares by plugging in the sale price. The program will spit out the ordinary gain and capital gain, but it doesn't know how many suspended losses that you have. Generally, the ordinary gain is driven by recapture of previous amounts that were deducted from the MLPs income, like depletion deductions, IDC's etc., so the longer you have owned the MLP, the greater those deductions and the more recapture (ordinary income) you will have. Several posters on the i.v board have posted their experience with several MLP acquisitions.
Your question raises another issue and that is are all MLPs doomed to be acquired by their parent GP's, thus undoing one of the very reasons that they were created. I note that the acquisitions have gone the other way in the past in that some MLPs, like EPD, MMP and NRGY (which was later merged with CMLP) acquired their GPs to eliminate the IDRs.
There are two forces at play: the price of the MLP and the price of the GP and I guess the GP's are saying that the market is not valuing the MLP high enough or conversely the market is valuing the GP too high so that it can use its high priced stock to acquire an undervalued asset. All of this MLP takeover action might get those MLP values to start moving up.
As for ETE, that would be a heck of a lot of entities to acquire but I don't know how it would compare to KMI/KMP/EPB/KMR.
Well, I got busy and I missed FB going over the 20 level on the slow stochastics. It looks like it moved almost 4 points with only another 4 points until it hits its high. Maybe there's a slight pullback tomorrow.
Maybe the best way to play these moves is with options, but I have not checked out the premiums. I've been wanting to test this slow stochastics theory out again with FB.
Vin, Since ETE is itself a partnership, it gives you a k-1, but it is required to break out each MLP separately so you end up having k-1s for ETP, RGP, and all the other entities. Same thing with ATLS to report their interest in APL, ARP, And their other interests (this was before the merger with TRGP). If ETE had not quadrupled for me and increased their distribution, it would have been a pain but sometimes a little extra work is worth the effort. BTW, there is some discussion about this on the IVR board around tax time andromeda speculate that the irs does not enforce the requirement to separately report the individual entities but the MLPs clearly instruct you to break them out.
Payback, the really good GP's like ETE will never have a very high yield because their share price should always move up with their growth. Since they are levered to their underlying MLPs, if they are managing the businesses well, both the distribution and the share price should increase. If you own it for a few years you will see your yield on cost basis increase by a big amount. I think mine on ETE has at least doubled. The only drawback is all those K-1's for the underlying entities.