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People's United Financial Inc. Message Board

not_totally_gray 53 posts  |  Last Activity: Feb 9, 2016 11:22 AM Member since: May 14, 1999
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  • Reply to

    There's nothing wrong with KMI's business

    by not_totally_gray Nov 20, 2015 6:12 PM
    not_totally_gray not_totally_gray Nov 24, 2015 4:22 PM Flag

    According to quote from last press release, "President and CEO Steve Kean said, “We produced distributable cash flow before certain items of $0.51 per share for the third quarter resulting in flat coverage for the quarter and total excess coverage of $228 million for the first nine months of the year."

    That $228 million in "excess" cash flow is vs the $3.5 billion or so that they paid out, so that's about 94% payout even if you take their definition of cash flow at face value. And that includes first part of year when commodity pricing was better -- current qtr they paid out everything. So they are in fact paying out substantially all of their cash flow -- arguing whether that last couple % is "excess" is sort of silly.

  • Reply to

    Kinder Morgan debt vs dividend

    by lining825 Nov 23, 2015 5:43 AM
    not_totally_gray not_totally_gray Nov 23, 2015 5:02 PM Flag

    "LOL What papers are your reading?"
    I'm reading the coupon rate on the new preferred stock that they just had to issue.

  • not_totally_gray not_totally_gray Nov 23, 2015 10:50 AM Flag

    I tendered 1000 shares, and as of this AM, based on current SYF & GE prices, if I sold my SYF shares and bought back my GE shares, would net about $800 profit. It's just free money. Still not sure if I want to keep my SYF shares, add to the position, or sell it and buy back the GE shares, but free money is free money.

  • not_totally_gray by not_totally_gray Nov 20, 2015 6:12 PM Flag

    If you just landed here from Mars and didn't know anything about KMI's past history as KMP, and looked at the business, you'd think it was a great business that should be valued at 10-12X cash flow. Because the cash flows are so stable, you'd be comfortable paying out maybe 60% of that as dividends, and using the rest to fund growth projects. That would give you a blue-chip company selling for about $22-23/shr, paying out about $1.30 dividend, with a nice plate of internally funded growth projects that would fuel dividend growth for years. The problem isn't KMI's business, just this insistance that they will pay out almost all of their cash flow and rely on selling stock for almost all their cap ex. That's an awesome plan as long as the market is willing to value your stock at 18-20X cash flow or whatever it was when KMI was yielding 4%, but doesn't work otherwise. Far and away the most sensible plan is to recognize that the game has changed, simply pay out less cash and use retained cash to fund growth. Oil majors like CVX are also cash flow constrained, but they have really solid balance sheets so they can just borrow for a couple of years at low interest rates -- they aren't dependent on selling stock at these low prices. This bizarre insistance from KMI that they can continue to sell stock at an ever-spiraling cost of equity to fund new projects is what creates the impression that the company is sinking deeper in distress, which just feeds on itself. The business is fine -- it's the payout policy that is bent, coupled with the fact that they can't simply borrow to tide them over.

  • Reply to

    Today is a day to buy the VNR preferreds

    by johnrobert1964 Nov 12, 2015 1:57 PM
    not_totally_gray not_totally_gray Nov 20, 2015 4:02 PM Flag

    Once they cancel the distribution on the common and the hedge book runs out, who knows if they ever resume it? Chances are that the outcome would be some sort of large-scale restructuring or recapitalization driven by the bond holders that would massively dilute current equity holders. Maybe preferred shareholders wind up getting paid off, maybe not. No matter how you look at it, the risk/reward is hugely skewed towards the bonds instead of preferreds.

  • Reply to

    Today is a day to buy the VNR preferreds

    by johnrobert1964 Nov 12, 2015 1:57 PM
    not_totally_gray not_totally_gray Nov 18, 2015 4:16 PM Flag

    The flip side to that is, if they wind up cancelling the common distribution, there's no reason for them to continue the preferred dist either.

  • Reply to

    SYF added to S&P 500 After Market Close Tonight

    by jimbocobb Nov 17, 2015 8:40 AM
    not_totally_gray not_totally_gray Nov 17, 2015 10:55 AM Flag

    Every SP 500 index fund already owned GE and will presumably acquire their SYF shares that way. Most likely they're using options and derivatives to lock in appropriate SYF exposure until the shares are actually distributed.

  • Reply to

    Go figure

    by catherinekolen93 Oct 31, 2015 12:53 PM
    not_totally_gray not_totally_gray Nov 17, 2015 10:52 AM Flag

    "I doubt they will do a secondary until the stock gets into the 30's." If they have the opportunity to acquire assets or invest the money at an attractive return, I think that drives when they issue new equity, not the market price. Obviously it's nicer if the stock price is higher, but I'm sure they factor current cost of equity into their calculations before pulling trigger on a deal. Either the numbers work at whatever the current stock price is, or they don't. If there is a floor for issuing new shares, it's probably book value (which is $26 and change).

  • Reply to

    Want to own PDI

    by footwedge4bogey Oct 12, 2015 3:29 PM
    not_totally_gray not_totally_gray Nov 17, 2015 10:03 AM Flag

    which ETF's do you own? I own DGS which focuses on emerging market small caps, but would like to spread out into others.
    A good chunk of my "taxable" accts are in either longer-term muni bonds that I plan to hold to maturity or midstream MLPs. Even with the beating MLPs have taken in the past year, they're still solid tax-efficient cash generators and have accounted for very nice returns. Most of my munis have coupons in the 4-5% range and seem to balance out the MLPs nicely.

  • Reply to

    Results of SYF exchange

    by dipizza109 Nov 17, 2015 7:49 AM
    not_totally_gray not_totally_gray Nov 17, 2015 8:50 AM Flag

    Why should it drop to $28.90 in the open market? It would only do that if someone else (besides GE) was willing to sell their SYF stock for that price. The fact that the offer was oversubscribed by 3X indicates that people wanted the shares and presumably will not dump them right away like with a traditional spinoff.

    That said, anyone who wants to guarantee a quick profit can short SYF now and cover with the distributed shares in a couple of days, so would not be surprised to see it trade somewhere between 29 and 30. But I think SYF goes back above 30 pretty quickly once the exchange is completed.

  • Reply to

    Want to own PDI

    by footwedge4bogey Oct 12, 2015 3:29 PM
    not_totally_gray not_totally_gray Nov 13, 2015 7:32 PM Flag

    One, you have to own *something* in your taxable acct, and owning something that earns 14% (when you include the annual special div) even with the higher tax rate beats most other reasonable alternatives. Second, have you set up a Roth? Even if you are over the income limit, you can contribute 6500/yr to a post-taxable IRA then immediately convert to a Roth. I do this every year and buy more PDI, it's a great way to own it. My Roth is split between PDI and BXMT and I'm loving the tax-free income.

  • not_totally_gray by not_totally_gray Nov 13, 2015 7:26 PM Flag

    The PIMCO info sheet lists info for 20 funds as of Oct 2. 18 of the funds have UNII between 0 and $0.40; one fund has UNII of $0.78; then PDI has UNII of $1.76. For YTD distribution coverage, most of the funds come in between 90% and 108%; PCI clocks 119%; then PDI comes in at 156%. No matter how you look at it, a real outlier for UNII and coverage.
    I wonder if the date of special distribution has changed with different fiscal year? I would have thought it would have been announced by now if it was being paid in January.

  • Reply to

    thoughts about the swap

    by bobs1016 Oct 20, 2015 10:38 PM
    not_totally_gray not_totally_gray Nov 11, 2015 4:14 PM Flag

    I just tendered my GE shares. Based on trading last couple of days, GE is now at highest point since 2007, while SYF is cheap, so this is a great opportunity to sell high, buy low, skip the taxes, no transaction fee, and get a 7.5% discount on top of it all. With SYF getting added to SP500 and (I'm sure) paying dividend next year, nothing but upside IMO and probably the best quality company at 10X PE that you can find. Still love GE but expect I'll be able to buy it back for 27 in reasonably short order.

14.20-0.34(-2.34%)Feb 10 4:00 PMEST