It has attained a unique position..... KMP has even moved more than EPD since the export news last week
We now are about to have a LNG facility.... a refinery scaled for export... and a tanker fleet
3 Home Runs relative to the future.... I wish the Hedgeye guy would put out a nonsense piece so that I could add in the low $70s
Kinder thinking ahead of the pack.... again
We will be in an environment where investors are looking at them head to head and the equalization of share price will make it quicker and simpler to see EPDs strenghts
"retirees" should understand that "leveraged" ETFs and ETNs should only be used by investors who monitor their accts constantly. They are not buy and hold investments.... Most sites that explain how leveraged ETFs and ETNs work will even caution against ever holding overnight... do not buy this type of investment without a full understanding of how they work and what the risk is
There is a concept called asset decay that will cause the value of such "investments' to decline overnight even if the assets of the fund increase... and the fund has to rebalance each and every day because it mirrors "daily" performance not performance "over time"
Only the most very sophisticated investors should touch them...
This Steveshrift has to work for the investment bank that markets mlpl because trading the ETN has no effect on its increase in value.... there are only fees to be earned by the banker
Icahn's cost is about $46.... He got $2.24 in 2013 in divis... and he's at $1.50 for 2014 (inc 2nd Q 14)...
That's $3.75 in divis (return of capital)... Share price is $43.70... that's $47.75 in value for him
Is that what you call losing your rear end??????
Then factor in he has been a long term player... Icahn will smell like a rose when he is done here
Could you imagine the losses if MLPs actually took a hit... like they will when the fed hikes rates
and BTW.... your divi is nowhere near guaranteed as it will shrink like a cotton tee shirt in hot water when it corrects.... But a distribution like EPDs.... that's money in the bank
and remember.... this rhetoric is in line with the opinion that leveraged ETNs are not buy and hold instruments suitable for retirees income...
They are an instrument that must be monitored on a constant basis
Hey whats with all your whining on the MLPL board about spreads and big down days.... didn't you know that the primary mkt maker in MLPL is UBS itself?
That's a bit off base.... while you are one of the "wealthy" people as an owner of EPD who will become wealthier... the Nat Gas Producers have been struggling for years with the cost to produce exceeding the commodity a good deal of the time.... the depressed Nat Gas prices have been a boon for Americans on the lower end
This will now create an environment where the Nat Gas Drillers will be able to profit off the liquids and most probably increase the supply of the dry gas we use in our homes which will keep those prices steady
This is a huge win for the American economy and don't underestimate it being released at the same time the downward revision in the 1Q GDP was released... these exports will have a very positive affect on US GDP for dozens of reasons
You can't comprehend shitfromshinola..... anything that "has no stocks in it" is composed of other assets.... AKA a "floating" basket of options...... that have to constantly be rolled and rebalanced.... to mirror the "DAILY" performance by a leveraged factor
Want to tell the flock that options do not have asset decay....
and BTW.... I just did a 1 yr comparison of EPD to MLPL and EPD has outperformed MLPL over that time frame.... and that chart indicates that in Dec when EPD was -2% off the start date.... MLPL was off about 12.5% at that time (a factor of 5Xs).... that is a perfect example of MLPLs risk and I guarantee you that MLPL would be off 30-40% if EPD were to slide 10-15%
Obviously your scenario holds true only if you owed since "inception"... which isn't even a relevant metric to someone considering it today.... that's why they say past performance does not indicate future performance....
My comment that you replied to was fact... MLPL has underperformed AMLP by a 3:1 ratio the last 2 days...
Please explain as it is supposed to mirror at a 2:1 rate... Oh yeah that's what USB failed to clearly disclose..... when it underperforms it can underperform by as much #$%$1... sounds like the perfect vehicle for "retirees"
Get a week of those returns if the index is off by 5+%... and your principal is hammered while you wait for the divi cut.... most "investors" do give a damn if their principal is hammered... I know you say you don't care but that's the biggest crock you have spewed
you failed to comment on the safety of the divi... since inception the divi has declined about 20%
of the time... EPDs Distribution has never declined
Retirees would be far better off with KMPs 7% tax differed distribution than MLPLs 8.6% taxable distribution... and I could play the empty speculation game too and talk about yesterdays metrics... you could have bought NS in the last year for $36 and tax differed 11% yield (I think arbtrdr did)... gained 60% to its current $64 unit price... but makes the current distribution 7.5%... can anybody guarantee NS's performance going forward...no... but that's the point jerkwad.... EPD... KMP... NS can and will all come off these prices.... which guarantees MLPL goes down by a % multiple greater than 2Xs
Another quick fact... while I detest the term "troll"... it is you who fits the definition by pumping MLPL here
For the last few years KMP has allowed the distribution to exceed the DCF in Qs 1&2.... they would usually make it up in a traditionally strong Q3 and Q4
This shows that they have actually listened to the critics...
It leaves us in a position where a strong 2nd half exceeds guidance and the distribution that is paid out may exceed earlier estimates
I think Kinder has once again outplayed his detractors.... an unexpected increase in the distribution in Q3 should shut the chumps up
As the rate raise fears rise profits will be taken... and the profits are significant... with the capital re allocated to higher rate vehicles
Its what has bothered me all along and the only way to stem the decline is by strengthening the yield by accelerating the distribution growth rate
All those paper unit profits can be wiped out very quickly... IF more of the massive DCF had been put into the distribution the units would not be what have been the worst performing MLP this week and partners would have more money in their pockets along with a greater expected revenue stream
The tax implications of selling mean that long term holders would take a massive hit so the unit price was/is meaningless.... younger investors will learn this lesson as they become addicted to the revenue stream and it will be that revenue to partners that they will want to see grow at a fast pace along with the units
"stays weak a few more days"..... EPD is not weak on results... its weak on the fear of the FED raising rates... low yielding EPD had very good EPS rpt but had as much as a 10% fluctuation in price.... high yielding KMP had good results and only saw a 4% fluctuation in price last week.... In a rising rate environment MLPs will trade at historical yield norms and that's not a pretty picture here
This will continue to weaken as long as there is the perception that rates will rise.... and unfortunately rates can only rise and it appears that will happen sooner rather than later
EPD can easily see its unit price drop to where the yield is about 5%....
Only one way to mitigate that drop.... and that's with a larger distribution.... that's called defending the unit price for the partners
Now is the time for a special bump in the distribution and a secondary which will keep the near term cost of capital as low as possible
Look at the financials... EPD has Greater revenue... greater profit.... and less tax than the combined Kinder Franchise
yet Kinder's combined mkt cap now sits above $100 billion... and EPDs is $70 Billion.. Kinder is more than 43% greater cap... how would a 43+% pop in the EPD unit price feel
There's gonna be some movement towards equalization and now matter how you slice it EPD wins because IF our unit price increase dramatically EPDs cost of capital goes lower still.... Kinder decreases... and the cost goes right back up wiping out the reason for the deal in the first place
Well as has been pointed out EPD does not have a GP that gets IDRs so the move would just tax all of EPDs income at the corporate level so anyone who has speculated that EPD would follow suit is a moron
I'll bet the douche just want to make it appear that the KMP deal is good so he is just a foolish talking head
The most unlikely scenario is that MLP structure will go the way of the dinosaur....... which would bring up the question of what did KMI know and when did they know it?
The real world reality is that most entering that type of security has income well in excess of $73K which more than equalizes the distribution/dividend
Less than $73K on a combined income in the real world and I don't know where one would find $.50 to invest..... and factor in that most small income investors invest through 401Ks if they invest at all and stocks are rarely an option for "low" income investors in those vehicles
Those that are looking at yield producing equities have significant 2014 type income and $73K is nothing in 2014 terms... not to mention those with the really big bucks/incomes have to pay income rates on dividends which destroys KMI as an alternative.... so maybe the guy buying 100 shares (more than 5% of income for a less than $73K earner) if they can afford it considers KMI.... IF I'm a Dr. with a decent portfolio and I'm looking to shelter $250K do I like EPDs 3.7% tax differed yield or do I like KMIs $4.5-5% yield where I could be paying 30+% Fed + 8-10% State..... ouch.......
Sheltering income from taxes will always be a priority of investors
I'll agree with you and the article.... policy has not changed.... just the classification of what qualifies as refined
And in light of that..... EPD is a huge winner
The WH may not want to call attention to this change in classification of certain petro products.... as I have been pointing out it may not be in their interests to be seen as petro/ trickle down economics friendly
The export of unrefined petroleum products creates JOBS everywhere... it is trickle down economics at its best
Producers drill more wells... Jobs.... wells require equipment.... Jobs... equipment is comprised of parts.... Jobs..... people making a decent wage spend money.... Jobs.... which create even more jobs... this doesn't even scratch the surface of Jobs created in transport and export.... which of course leads to even more jobs
So many of these jobs (1,000s) will be high paid engineers and highly skilled labors
All those jobs pay income tax.... higher revs to Uncle Sam and the states
The Obama administration has embraced Reaganesque trickle down economics as it is becoming abundantly clear that the liberal Keynesian model of printing money for the govt to spend and give to big banks to invest and prop up the mkts (Wall Street) is a failure for the economy (main street)
Countless Americans will be far better off as a result of the exportation of unrefined petro
When American petro products hit the world mkt that will increase world supplies which will actually temper prices and volatility.... which is very good news for John and Jane American
And yes this is a political post as it is a political issue as implied in the original post.... this issue has a huge affect on so much especially EPD unitholders
I think there is still a substantial upside.... KMI should trade to about a 4.5% yield which is $44...
That equates to about $98 in KMI stock plus the $11 in cash puts a value of about $109 to KMP holders
Problem for me is 2 fold..... that $29 profit is going to Uncle Sam.... and I have to replace 6.9% yield
IF Federal lands were to opened up to fracking.... Oh the Royalties.... and taxes to the treasury..... thousands of educated and skilled Americans put to work at more than livable wages.... all that money fueling the economic engine of the US of A
A stable abundant supply of energy to the world that stabilizes prices at a decent margin over the cost to produce.... some mad man goes bizerk in the mid-east and nothing happens.... Putin shuts a pipeline and all is well... financial mkts become less affected by geopolitical events
and on top of it all no need to have idiots clamoring for burger flippers to be paid $15/hr
well if you don't know the difference between the risk between upstream and mid stream MLPs you are way out of your league in commenting on anything related to MLPs...
Mid streams operate under long term toll taking contracts that have inflation hedged in... always sold out prior to being built
Upstream producers have so many variables starting with commodity cost.... production costs..... trans costs when pipe is not available...... that revenue and income could be all over the place
One of the biggest problems KMP/KMI have is they have upstream exposure
I suggest you take a look at EPDs long term chart and IF you are looking at guaranteed retirement income whether or not that is not on the top of your list to park your money
EPD also has a better uninterrupted history of distribution increases every Q since inception.... and actually at a faster growth rate most of the time than Kinder family units
It would be a good Idea to run EPDs chart with both KMP and KMI to see which equity has out performed too
oh yeah... circle back and run the EPD chart against LINE and tell me about risk!... and return
careful when your remarks exit the same place as your farts