You might also consider KYE... KMI is biggest holding (plus a number of other name-brand MLPs), yields almost 12%, something like 14% discount to NAV. Just a straight CEF, not an ETN.
What you want to look for are companies that can pay for expansion projects with retained cash flow -- commodity price decline and lower upstream cap ex will compress investment returns, while lower MLP equity prices will increase cost of capital, compressing returns further. You want companies like MMP and EPD who retain enough cash flow after paying the distribution to pay for growth projects without needing to issue new units. Unfortunately KMI does not fall in this group -- based on their own "sensitivity" numbers, an awful lot of their "excess" cash flow (which wasn't great to begin with) will get likely chewed up by lower oil prices. CVX is still running a massive cash flow deficit between dividend and cap ex that is "projected" to turn positive... in a couple of years? If everything works out? Even a frac sand company like HCLP is funding all of their development + distribution with current cash flow even at current prices, so all upside when demand picks up.
the big problem here is that as an MLP, not a regular corporation, the GP can basically decide to sell out to whoever they want and we can't do squat about it -- not like a regular corporation where shareholders have to approve it, as limited partners our rights are really limited. So all someone has to do is wave some stock options at mgmt and they're free to sell us down the river.
Every time I read about how "little guys" can't compete with "sophisticated" professional investors I laugh. It's the Wall Street "pros" who are panicking and dumping stocks like this at these levels, not retail investors.
But don't forget, a lot of wind power for power generation is replacing nuclear power plants, that used to be a large % of europe's (and US) power generation but is even more unfashionable than oil. And energy needs in developing markets will drive demand for oil/nat gas/nat gas liquids for a long time as consumer classes develop. US will import less and less oil as Asian markets continue to develop which IMO will continue to drive US energy infrastructure.
Just buy a few more shares, no need to go nuts... if decline continues, buy a few more. Just opened my first TRGP position last week with a small purchase. Was ugly in 2008 too when the bottom fell out, but the good companies just kept raising distributions quarter after quarter.
quick glance, earnings look awesome. what can you say about increasing dist by 36% YOY and still delivering 1.19X coverage? Current MLP selloff is complete bull****.
I think the way a buyout happens would be a private equity company taking it private in cooperation with mgmt. Enjoy the cash flow for a couple of years, take it public again in a couple of years, and mgmt gets fat stock options based on current low price. Since it's a partnership, the GP can do that without shareholder approval.
good question. I would have assumed that PER was insulated from an SD bankruptcy as a completely separate corporation, but I suppose if the royalty payments flow from SD to PER then they might be considered just another SD liability. There is probably language in the PER prospectus that specifically addresses that.
LINE is doing it right... at some point, the most likely way these upstream MLPs will be able to reduce debt to appropriate levels for a $60-$70 price environment is a debt-for-equity swap that would massively dilute current unitholders. By buying back debt directly instead of buying back shares, they are accomplishing essentially the same thing, but at much less cost to current unitholders. If they are actually generating as much excess cash as they say they are with hedges through 2016, they can buy back shares later once they've addressed their debt, now that they've trashed the price by eliminating the dividend.
I've owned it since 2008, so I know the drill... I also know perfectly well what will happen to AMZN, NFLX, etc -- just a repeat of the "nifty fifty" days of the late 60s, at some point when fashion changes they will just turn into dead money for decades even if the businesses themselves are perfectly fine. Just painful to watch, though.
I know it's irrelevant, but AMZN announces a *surprise* profit of $0.19 and the stock goes up over $80??? Because this is "growth"? "Growth" is raising distribution for 11 straight quarters including Y-O-Y 36% increase yet ETE is actually down today while AMZN is up over $80!! For 19 cents in profit!!
Looked at another way, just the *increase* in AMZN's market cap *today* is over *double* ETE's entire market cap. Sheesh...
Lots of money leaving energy sector and MLP stocks in general -- I suspect lots of funds that own these stocks on leverage need to sell, and when you need to sell, you don't necessarily have a lot of choice. With latest distribution increase, now yielding 4.3% -- how long has it been since yield was that high??
I think the warrants tend to go through periods where they are very overpriced -- specifically, relative to the publicly traded options -- and this is just kind of closing the gap. Probably a lot of that is because I suspect when KMI is actively buying warrants, it obviously artificially supports the price relative to the options.
with oil down and apple leading the rest of market lower... silver lining is, hopefully now that dist cut is out there, maybe we can finally put in a bottom.
I'd estimate $0.50 - 0.55? The hedges have ended, but I believe this distribution will include two months that were hedged.
I've been watching the same thing in HCLP. My best guess is some large holders or funds own on margin and are liquidating because they have to. It just feels like a lot of liquidity is getting sucked out.
almost 25% drop in less than 2 days of trading? Way more than other sand companies too -- either someone knows something and we're the last to find out, or simply panic selling and if you sell now you'll feel like a complete idiot later. no way to know for sure...