Bud, not sure I agree. They raised guidance and reported they have more volumes. I do believe that someone will want to acquire them, but it will take a pretty penny -- over $100 and maybe even more. Since ETE lost out on TRGP and NGLS, maybe they might come calling.
Many of you who read the i.v. board for MLPs have heard of a poster named Factoids who also posts his analysis on seeking alpha. He has two new articles out on consumer staples and MLPs and also covers BDCs. In a nutshell, for dividend investors, he analyzes a company's CAGR, required rate of return, distribution, bond ratings and accuracy of EPS predictions to make whittle down income picks. I've read his commentary on MLPs, but not so much on the consumer staples and BDCs. He mentioned he had warned against Coke and a BDC symbol FULL, which both sold off recently.
Sarge, take a look at Iron Mountain (IRM). The stock may have just broken out. Give it a day to see if it holds. They are yielding close to 6% when other equity REITs are in the 3-4% range. The stock did not fall during last week's plunge and held above its 50 dma. The REIT indices will have to buy it when they rebalance (in Nov). I think it goes to $50. I bought it before they announced the special divy and the new higher rate.
Let's hope this isn't a sign that the downtrend is returning. We aren't out of October yet. I keep saying this without every acting on it, but now may be the time to buy some insurance.
Agreed that the PXD assets are great, but something else held the stock back (maybe the overpayment on the South Texas assets). You are looking at the deal as selling your holdings but you really are exchanging your shares for NGLS shares. There might be some taxed owed on the cash, but in the CMLP/Inergy deal, which was another MLP to MLP merger with a cash component, there was no tax due as the cash was viewed as ROC.
As for the purpose of an MLP, clearly you want your MLPs to algrow distributions and grow in value. The deferral on income does end when your basis goes to zero. Even if you are passing to heirs, you would rather pass a larger value then one that has no increase.
Stagg, SFL, SDRL and NADL are not oversold in the true sense of the term as represented by the RSI. They may be UNDERVALUED in your eyes, but they have bounced and the oversold conditions have been alleviated. The charts on SDRL and NADL are broken and so it may take a long road to recovery. Some may try to capture the dividend, assuming it stays the same, so there could still be a bigger bounce to come, and the technicals on oil will also have a big impact on these (let's see if it can clear $85). You also have tax selling season, so you could easily see a run into the divy and then a sell off.
GAAP earnings are just an accounting convention and so don't measure the "safety" of a distribution. The item that you should focus on is the coverage ratio or the amount of distributable cash flow that is available to pay the distribution.
MMP just raised 20% yoy. That was one to have picked up in the recent slide as it got into the high 60's at one point. Probably goes to $90.
Kee, what is the projected distribution on RIGP? Lots of times these IPO's move after they make the first declaration.
First of all, APL's distribution was 0 at one point, so the 475% growth is irrelevant. Second, most of APL's stock price growth came in one year (2010-11) after they had re-established the distribution. Otherwise, it has been roughly flat from that period. Why not look at a more current time period and take out the period when they re-established the distribution? Again, I wish APL was trading in the $40's, but it is not and their distribution growth had flattened out. You speak about the favorable IDRs which I understand are a give-back by the GP for a certain time, but that give-back only lasts for a few years as i remember. The market knew about this IDR deal, but has not factored it in into a higher stock price, which means that the market is dubious of their ability to perform.
Meanwhile NGLS, which has only been public for a few years, has tripled in stock price. No doubt APL had great assets in the Permian (one analyst said they were worth the entire market value of the company), but you should do some research into NGLS. They have a much wider operation that APL and are becoming like a mini-EPD. This merger really is about 1+1 being greater than 2, but you seem to think that APL could go it alone when the entire sector seems to be consolidating. Since this is a stock for stock deal, APL holders' apparent loss is NGLS holders' gain and since you are going to get NGLS shares, you share that gain. BTW, neither APL nor ATLS has projected the future distribution growth of APL, so your assumption of greater distribution growth is just hope.
Bob, all due to BABA gain. Nothing in the earnings release about strategic plans for bringing out the intrinsic value. I'm thinking a proxy contest can't be far behind.
You're really stretching concepts to try to prove your point. According to you, the reason NGLS stock is increasing faster than APL is because NGLS is stealing APL's distribution growth. Nevermind, that NGLS's distribution growth is exceeding APL's and that NGLS is paying $1.26 to APL holders to make up for the difference. Your premise is that APL would increase, both in stock price and distribution growth, better without this deal. The facts show you are wrong.
I appreciate the argument that MLP investors care more about cash in the form of distributions, but your heirs will care when you leave them a stock that has increased in value more, especially since they will take that increased value out tax-free from the step up in basis.
Well, yes and no. The Fed won't/can't raise the Fed funds target. The market is keeping a lid on long-term rates.
Stagg, many have discussed an analogous situation with oil and gas producers when oil and gas prices decline. One view is that the producers have to produce no matter what the market price is because they need cashflow to service debt, because in some cases they need to drill in order to maintain leases and because they may have hedges at higher rates so it doesn't matter what the market price is.
SDRL and all of the energy related stocks are following the price of oil, so I guess it depends on what happens with oil. Some have speculated that we could still see a test on oil of $75. On the positive side, the MACD lines seem to be turning up, there was that positive note in Barrons and its child, SDLP should be reporting an increased divy within days (I thought the divy announcement was due on the 17th). The algos that do most of the trading might read "Seadrill Partners raises divy" and buy Seadrill (SDRL).
Today at 1:30pm, NGLS is up $2.28, while APL is up $0.66 or 1.78%. Of course, this may not hold or may even be reversed, My guess is that after the merger closes, it's not going to take long to make up in share price gains for that 70 cent distribution difference you are crying about.
Stagg, there's an article on Barrons today of a report from Morgan Stanley that is positive on the drillers. Says to stick with SDRL even though a dividend cut has been priced in. Also is positive on SDLP because of their dividend growth.
I'm not sure we have seen the last of the correction. Some large well-known companies are starting to miss earnings: IBM, McDonalds, and Coke. That's usually not a good sign when leadership is shrinking, but as I have been saying for 5 years now, this rally has been about the Fed and QE.