Bosox, I appreciate all the work you have done in the past on these names. The flaw in your assumption is that that is the model for GP's when the underlying MLP is raising their distribution, not cutting it like ARP just did. Old ATLS did have a nice run when both APL and ARP were raising their distributions, which flowed through to their IDRs, and then it stopped. Remember when ATLS was $54 and on its way to $70? Some speculated that each of APL and ARP started to overpay for acquisitions. As many have commented, the acquisition market is locked as no one wants to sell while prices are down. Not sure where ARPs capital is going to come from, unless they keep giving sweetheart deals to Cooperman. Then there are the operational issues, hinted at in the recent conference call and likely to be disclosed in the Q1 earnings call. The bottomline is that these guys overpromise and underdeliver, they overpay for acquisitions and underdistribute. I might take a look again around $4 if there are signs that commodity prices are on the eve of turning. As I said, the worst operators in any sector can bounce the most when the sector turns, but the lesson from this adventure with the Cohen's is that if you are fortunate to get a good bounce, take your profit before they screw it up, as they will most certainly do.
I look forward to your continuing posts.
Front page article in today's WSJ. A couple of points. First, sometimes the media can break a story about a development in an industry, but many times, by the time they've done their research and checked their sources, the story is already known and discounted by the market. Second, many of the stories about any issue don't dive deep enough into all the relevant factors. The WSJ article had a nice illustration with all of the different types of storage and what they charge, but did they cover all of the storage industry. They mentioned that new storage is being built. S.A picked up the WSJ story and in the comment section, someone posted several articles (I haven't read yet), that said Cushing isn't that big of a factor. Third, pipelines ship more than just crude oil. There's all the refined products, NGLs, nat gas and condensate which is being exported. Although I don't own PAA, they said in their conference call that there is organic growth of new pipelines being built into new areas. I also thought that producers have to reserve space on these pipelines, so the pipelines get paid, not only based on volume, but also from these reservation fees. Finally, the better run pipelines have been in business through many up and down cycles, and many of them are investment grade and don't have the debt constraints that many of the e&p MLP firms ran into. PAA mentioned that there may be some M&A.
William, as I remember, if a company with NOLs has a change of control, the acquirer loses a large part of the benefit of the NOLs. The company would prefer to be sold in a stock or cash deal to get capital gains treatment for its stockholders. If the company liquidated its assets instead, the tax affect might be different, and probably more importantly, in a merger the board of the selling company gets off the hook faster. In an asset deal, they have to set up a reserve which keeps them liable for a longer time. But the bottomline is, what does MCGC have left in terms of a platform (employees, loan servicing contracts etc) that an acquirer would want to add.
This is the symbol of the general partner of EQM which filed a registration statement to go public. They filed in mid Feb, so it will be a couple of months before the offering is cleared to go public. Too early for an offering price or targeted quarterly distribution, but the reg stmt has some nice tables that shows the growth of what this gp will get from its mlp, EQM, from their ownership of the 2% gp, lp units in EQM and the IDRs as EQM raises their distribution.
Next I have to check out the filing for the gp of Tailgrass. That one is going to file a 1099 instead of a K-1.
Saw this one on the CNBC ticker this morning with a 4% drop. They issued an spo which explains the drop. The chart looks beautiful, but observe how the stock spiked after they announced earnings and raised their divy 10%, only to have the spo bring it right back to the trend line dovetailing with the 50 dma.
I owned ARI for a short spell a couple of years ago -- maybe Bob had mentioned it.
Now time to looks at their earnings report.
David, ATLS should yield more than the underlying ARP. If they pay 70 cents, it should yield at least 15%, which should bring the price to $4.66. When the 1Q distribution is announced and is pro rata, that should push a few more people to sell.
While the worst run companies in any sector can bounce the highest in a recovery, I am not going to play that game with these jokers. I chose not to play the TRGP/spinco merger arp, and am now thinking of switching out of ARP.. These guys are jokers.
Thanks Ed. I appreciate the support. Also, thanks for the push on O, out at $55, now $50. I'll revisit that name later if it dips back into the $40s.
Ed, Griffen gives a link to his spreadsheets in some of his posts. I have not tried to open them. I saw him on the ARP board, and he's talked about EVEP BBEP, LINE VNR and a few others (maybe LRE).
Well that would be a home run. They are carrying UEO on the balance sheet at $350, so that would be a pickup in value of $350 or $7 more per share.
After the failed Utica sale fiasco from a few years back, I hate to start speculating on their m&a abilities, but if that value for UEO comes out, then the market is missing something. The stock is selling at $15 and there's $7 of value that is not being recognized? Is my math wrong?
Rates have backed up, as measured by the 10 yr Treasury. The 10yr had gotten as low as 1.6% as I recall and now its 2.12.
I wasn't that impressed with the s.a article that was mentioned above. I would defer to an expert on hedging, but could this theory that WMC is overhedged be wrong despite the loss in book value during last quarter? It seems that they own both fixed rate hedges and floating rate hedges, but don't these have the effect of cancelling each other out, at least partly?
WMB just issued $3 billion of notes. They are the 49% owner of UEO through their recent acquisition of Access. Can't find the DCF for 2014 anywhere to be able to estimate a value.
Was this the quid pro quo for Cooperman getting on CNBC and mentioning ATLS every chance he got? He's been in ATLS and ARP for a long time and I wonder whether he is positive. You would think that he would be a tad upset at management for cutting the projected distribution by more than half, TWO WEEKS after filing an SEC report saying it was going to be twice as large.
At the end of the day, ARP and ATLS are put options on mismanagement.
Payback, the whole LINE experience was a disaster. I was a late comer to LINE, having read several posts on these boards about how great they were (lesson learned about confirmation bias), before I took the plunge. LINE did have a great track record and stock performance up to one point. The funny thing is that many of their issues were resolved favorably, but they still took their toll on the stock price. Some did manage to trade the stock profitably by buying when the bad news was in the stock and then selling when their issues were resolved favorably.
It's always good to hear the other side of a position (especially if you own a stock and could be missing a risk) if it is well-thought out. I learned about the dangers of excessive debt-levels from prior bear markets, but some on this board pushed the view that debt does not matter.
There will always be people who prefer to keep their rose-colored glasses on because they think the purpose of these boards is to pat each other on the back.
Good luck to you, and judging from your post, you may have a lot to contribute to the discussions here.
On WGP, Wells does not have a report but CS does. They raised their target price to $73 but maintain a neutral rating, but that was issued before this last acquisition announcement. I'm going to watch.
DH's post brings up a good discussion point about which is closer to a bubble -- stocks or bonds. DH seems to imply that bonds are closer to a bubble (but one could ask him the same question that he posed to Payback -- based on what?) DH has argued previously that there is no inflation to speak of, and the rest of the world is in deflation, so why would bonds then be in a bubble? As to a potential bubble level for stocks, there is no one magic level that determines whether it is a bubble or not. Past bear markets have started at different p/e levels. And is it the forward p/e level, which is just based on estimated earnings which can change, or is it the rolling 10 yr p/e made famous by the Yale professor (drawing a blank on his name now). If money is going to flow to the best risk/return, then why would it flow to US stocks that have risen in value and multiples and not to more undervalued areas like Japan and Europe. The Japanese market has started to put in new highs. Big investors don't ring a bell when they start to exit their allocations.