I've owned MMP for ages -- used to own their GP when it was publicly traded, and held on to the MMP shares I received when it was bought. Have NOT sold any MMP, and don't intend to. Part of the EPD scenario is I'm already way overweight in MMP and don't really want to buy more, but EPD has a lot of the same positives as MMP. I agree they're a super pair.
Finally pulled the trigger and bought some EPD this morning. Owned KMR forever and now KMI, but have been wanting to start selling that (plus ETE) to buy EPD. Always been tough to justify the tax hit to switch to EPD, but with KMI selling close to 52-week high and EPD close to 52-week low, IMO this is a no-brainer.
I have the exact same reaction. The fund has been paying out very large "special" divs every single year it's been around so it appears to be very consistently out-earning the distribution. IMO that's the reason this fund doesn't trade at the large premium as other Pimco funds, half the income is "buried" in the special dividend and doesn't show up in the fund's yield.
you would think so -- they can't possibly be banking an extra $0.42/month -- but what does that tell you, even after paying out another enormous special dividend in January that they *still* had money left over.
I let all the dividends in the account accumulate as cash, and periodically I just buy more of whatever I want to buy more of. Might well be more of this soon, if price keeps dropping.
At the right price, PER is actually a great way to invest in oil in current climate. There's almost none of the variables or risks that other oil producers have. Since it's a depleting trust and you know the stock price is going to basically 0, you don't need to worry about stock price. There's no debt, so you don't need to worry about lenders or leverage; no development, so you don't need to worry about cap ex or ROI for a development program. My estimate is that once the hedges expire (assuming $50 oil), you're looking at a distribution of maybe $0.32; next year, that declines to maybe $0.20 when the sub units convert, and then declines maybe 8% annually after that as production fades. According to my spreadsheet, current price discounts maybe a 6% IRR over life of trust. But of course, if price of oil goes up, you get the upside from there.
I'm following with an eye to buying in once expected IRR gets to 12% or so, which would be price of $5 or so, but personally would not buy until I see what the first post-hedge distribution looks like.
Hi, this is well and good except that PER is not an MLP -- it is a royalty trust, not a partnership. The distribution that is paid out is a mix of interest income and royalty income, not "a reduction in your cost basis." The tax treatment in general will be much different than an upstream MLP, like BBEP.
REITs everywhere have been getting sold off -- my STAG and AVIV shares sold off worse than CSG, and business is going gangbusters for both. Looks like 2013 all over again.
good day to lose the ceo, it turns out -- we're actually down less than a lot of other REITs.
IMO the initial reaction is pretty positive... shares were sold at $75.50, opened for public trading a dollar above that, and then added another $1 by mid-day. That tells you that not only were the new shares snapped up, lots of other folks took advantage of the dip to buy more. I bought some more myself first thing this morning at $76.47.
why on earth would the dividend not be sustainable?
the list of high-quality, non-distressed companies selling at 52-week low in this market is really short. hopefully more folks will notice this.
I was going to make fun of this post until I looked at a chart and saw that even with all the punk news going on with RIG lately, it's still up from mid-December.
wouldn't you kind of expect that given that he now works for their competitor? it was great that he said lots of nice things about his pimco funds after he left -- obviously he didn't want to trash them since he still owned a gazillion $$ worth -- but you'd expect him to sell out over time. I'd be surprised if he still owned a single share of Pimco-anything by a year after his departure.
"Look at the whole sector"
Not quite -- last week I swapped my HCN for HCP because there seemed to be a big valuation disparity. Since then HCN has holding up fine, HCP has been declining much more.
EPD. That 1.5X coverage ratio and conservative financial mgmt while energy markets are gyrating all over the place is a nice security blanket.
I agree with that -- I can easily seeing them selling or spinning off the Canadian utility to focus on the midstream businesses and become more of a "pure play"
I've owned KM for years, both the KMR LP shares and KMI before last year's take out, and I am *clearly* favoring SE vs KMI now. I recently sold some KMI -- for the first time in years -- and bought SE. Comparing the two, I think KMI is much more aggressively levered / smaller margin of error, plus they still get a large amount of cash flow from oil production that introduces a lot more risk -- given their IMO thin distribution coverage. SE is a much simpler play on North American nat gas demand/production, more conservatively managed, with better growth prospect simpler because they're a fraction of the size. IMO they're more similar to KMI 5 years ago in terms of benefiting from the IDR's of the captive MLP. What we learned from the KMx experience is how much better it is to own the GP instead of the LP, and I think that will play out again with SE vs SEP. (I'd also buy EPD instead of KMI at these prices, too.) Still own a large chunk of KMI, so I don't want to paint it as too negative, but new money definitely going to SE.
they might, but ETE already controls the GP, so not much chance of success. That said, they're a fairly mercenary bunch, so if someone really wants to overpay I'm sure they'd consider selling it all.