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Taiwan Semiconductor Manufacturing Company Limited Message Board

not_totally_gray 43 posts  |  Last Activity: Feb 24, 2015 2:27 PM Member since: May 14, 1999
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  • Reply to

    preferreds getting crushed

    by not_totally_gray Dec 3, 2014 4:29 PM
    not_totally_gray not_totally_gray Dec 5, 2014 12:02 PM Flag

    My bad, you're correct, I thought the distributions would be qualified dividends if VNR's net income was at least greater than the distributions, and ROC past that (I had owned a different preferred that was taxed that way). The exact wording from the offering document is:
    "The tax treatment of distributions on our Series C Preferred Units is uncertain. We will treat the holders of Series C Preferred Units as partners for tax purposes and will treat distributions on the Series C Preferred Units as guaranteed payments for the use of
    capital that will generally be taxable to the holders of Series C Preferred Units as ordinary income."

  • Reply to

    Getting Killed on VNRBP

    by jshsky Dec 5, 2014 4:19 PM
    not_totally_gray not_totally_gray Dec 7, 2014 11:36 PM Flag

    I think these are getting killed with tax-loss selling + lack of liquidity. Last December did very well buying several bond ETFs/CEFs that had been getting hammered and recovered decently in Jan/Feb. Will they rally back to 24? Probably not, but I expect at some point in Jan/Feb I'll have the choice of selling some shares for quick 10-15% profit or just holding them for the income.

  • Reply to

    preferreds getting crushed

    by not_totally_gray Dec 3, 2014 4:29 PM
    not_totally_gray not_totally_gray Dec 7, 2014 11:49 PM Flag

    Last quarter, they have distributable cash flow of $58 million before paying out $5 million to the preferred holders, leaving $53 million for the common LP units. That's AFTER interest on the debt AND maintenance cap ex. So 90% of their DCF can evaporate and they still have the cash flow to service the debt, maintain production, and pay out the preferreds. And it's tough to lose 90% of their DCF when only 40% of their revenue is oil.

    If oil goes to $40 and stays there until VNR's current hedges run out, probably the common distribution get's slashed, but basic economics is that oil price (like any commodity) won't sustain a price below marginal cost of production, which I believe is somewhere in the $70s or higher if you're talking enough production to meet current demand.

  • Reply to

    pdi special dividend

    by robertakosten Dec 10, 2014 3:21 PM
    not_totally_gray not_totally_gray Dec 11, 2014 8:19 PM Flag

    Early this year the UNII balance was actually slightly negative, so everything in UNII right now is from this year.

  • Reply to

    Special dividend around $1.30 minimum

    by plano_investor Dec 11, 2014 10:46 AM
    not_totally_gray not_totally_gray Dec 11, 2014 8:27 PM Flag

    Last year they paid out essentially all the UNII, so I'd be surprised if it wasn't at least that much.

    Not real thrilled that 30-50% of our annual income gets distributed to folks who only hold it for a couple of weeks, but on the other hand I'll be buying some more to do just that myself. Seems like they could easily raise the monthly payout by at least a third and still have cash left over, they've comfortably out-earned the distribution every month since 2012.

  • Reply to

    Am I an idiot for not bailing out of VNR preferreds?

    by jshsky Dec 12, 2014 5:18 PM
    not_totally_gray not_totally_gray Dec 14, 2014 11:52 PM Flag

    I felt like an idiot in 2008 & 2009 with all my MLPs, I felt like an idiot in 2013 holding onto my bonds, and I wound up making all kinds of profit while never missing a single income payment... so I feel like an idiot now also with these preferreds, but I suspect this will also turn out OK. Bottom line is you have a preferred claim on some real assets that produce real income. I agree with you about supply/demand also, I already saw an article that Bakken production in Nov declined from prev month.

  • not_totally_gray not_totally_gray Dec 15, 2014 4:47 PM Flag

    1) where do you get the idea that payments are "guaranteed" ? Distributable cash flow of $30 million will decline to less then $20 million once the hedges expire next quarter, and decline sharply once they stop drilling new wells. You've got about 45 million regular units, and add 7.5 million more once the sub units convert. Nothing is guaranteed.
    2) your $1.50 residual value is simply made up. even if it's accurate, you need to discount it back 17 years, so it's effectlvely 0. What are those wells going to be worth in 17 years, net of production expenses, divided by 52.5 million units?
    You're probably looking at less than $2/shr payout through 2015 if oil prices don't recover, declining to probably less than $0.30/yr by end of trust lifetime.
    I'm not saying it's a disaster at $6.50 or so per share, but it's not a steal either. IMO a much better bet would be the preferred stocks of something like VNR or BBEP, which give you a preferred claim on the cash flow + are priced to yield 12% or so right now + support from active development programs instead of depleting to zero.

  • Reply to

    Yield 7.82%

    by emi_1114 Dec 15, 2014 12:08 PM
    not_totally_gray not_totally_gray Dec 16, 2014 9:39 PM Flag

    " I can't think of any reason why their suppliers wouldn't be too "
    Here's a couple of reasons -- 1) some producers borrowed out the wazoo to fund drilling -- HCLP is only modestly leveraged, $3.5 million interest expense vs $65 million EBITDA. 2) other producers have high costs and can't make money at current prices. HCLP sells for $70/ton and produces it for $14 (more or less) 3) still other producers need to cut div to pay for development. HCLP doubled capacity, paid for it with an equity issuance earlier this year, and has already sold most of the additional product. 4) oil producers are faced with initial decline rates of 40% or more from new shale wells, and *need* to drill to stay in business. plus, they can boost returns by using... wait for it.. MORE SAND in each well that they do drill. Contrast the dynamics of an oil well with initial depletion of 40% with an HCLP sand mine.

  • Reply to

    Baird PT drop from 21 to 12

    by cash.flowguy Dec 16, 2014 9:48 AM
    not_totally_gray not_totally_gray Dec 19, 2014 1:12 PM Flag

    I was looking through the offering doc for the preferred, I didn't see any language in there linking preferred distributions to debt covenants.

  • Reply to

    The chart says " 9 bucks by Friday".

    by foxnewsbschecker3 Dec 16, 2014 3:51 PM
    not_totally_gray not_totally_gray Dec 20, 2014 11:18 AM Flag

    One thing you have to give them credit for, in recent years when everyone was trying to get more "oily" and paying $$$ for oil acquisitions, VNR looks pretty smart now for buying nat gas properties on the cheap.

  • Reply to

    Ex-date for Pimco closed-ends 12,24

    by mo2936 Dec 22, 2014 2:57 AM
    not_totally_gray not_totally_gray Dec 23, 2014 4:07 PM Flag

    one of the reasons it's not reacting to the distribution is probably because no one knows about it... I haven't seen any public announcement, including the fund page on the PIMCO website.

  • Reply to

    Ex-date for Pimco closed-ends 12,24

    by mo2936 Dec 22, 2014 2:57 AM
    not_totally_gray not_totally_gray Dec 23, 2014 10:40 PM Flag

    It's very strange to me that this particular press release was not distributed on the wire services like the others... you can see just in the past couple days, the press releases for the new fiscal yr, etc are broadcast on Marketwired. They obviously deliberately chose to not publicize this one.

  • Reply to

    Ex-date for Pimco closed-ends 12,24

    by mo2936 Dec 22, 2014 2:57 AM
    not_totally_gray not_totally_gray Dec 24, 2014 9:49 AM Flag

    where do you get "17% of the total" ? Energy-related bonds are a tiny part of the portfolio.

  • Reply to

    PDI will trade lower into $28 price range

    by ampex_a_dud Dec 24, 2014 10:42 AM
    not_totally_gray not_totally_gray Dec 24, 2014 6:25 PM Flag

    I think sending half your money to each is probably a great idea -- they're arguably the two best fixed income mgrs in America. Both will probably figure out a way to make money in 2015 no matter what. I doubt the fixed-income market is quite as binary and simple as you make it out to me.

  • Reply to


    by willispopeiii Dec 26, 2014 12:23 PM
    not_totally_gray not_totally_gray Dec 26, 2014 3:42 PM Flag

    I've noticed the A shares have been very strong relative to the B and C shares for a while now... A shares yielding 9.25%, C shares 10.65%, with B shares a bit less than the C. B & C shares have about $2 of headroom before the yield is comparable to A, I think it's only a matter of time before that gap closes.

    Volume today is comparable for all three, with the A shares in the middle. Best guess is that this is simply the sort of thing that happens with thinly traded securities? and it is a good opportunity to profit from it. Someone who wants to accumulate as few as 10,000 shares can probably swing the market dramatically.

  • Reply to


    by willispopeiii Dec 26, 2014 12:23 PM
    not_totally_gray not_totally_gray Dec 29, 2014 10:23 AM Flag

    looks like today is the make-up day... another example where inefficient markets are your friend.

  • Reply to

    How they will pay DIV?

    by eejjww36 Dec 23, 2014 10:53 AM
    not_totally_gray not_totally_gray Dec 29, 2014 2:38 PM Flag

    I can't imagine that they would borrow to pay distribution... they will want to preserve as much borrowing capacity as possible for development expense + build up liquidity against whenever their next maturity is + (hopefully) the ability to buy properties at fire-sale prices, which you have to assume will start to be available. The smart thing is to look at what their cash flow will be in 9-12 months as hedges roll off assuming current prices, and cut distribution to that number sooner rather than later, and build up a cash/liquidity reserve with the difference.

    Based on their latest table of price sensitivity, they'd be at about 85% coverage at current prices. But only 30% of their oil is hedged for 2016, so presumably as 2015 progresses and current hedges expire, that coverage will get worse and worse. In current environment, not maintaining conservative coverage of at least 1.1X coverage is simply silly. Their price sensitivity table was posted at end of October, and only shows oil down to $70, and it's already dropped to $55.

  • Reply to

    Distribution eliminated?

    by bridgejumper08 Dec 29, 2014 2:12 PM
    not_totally_gray not_totally_gray Dec 30, 2014 11:37 AM Flag

    that announcement is for the preferred shares, not the common units.

  • Reply to

    Thinking about investing in BBEP

    by whiskyglen Dec 30, 2014 2:02 PM
    not_totally_gray not_totally_gray Dec 30, 2014 9:47 PM Flag

    First off, like several other posters, thank you for your service. Not to belabor the obvious, but this is a small, leveraged, risky oil company. As such, I would suggest you hedge your investment in BBEP by splitting your money with another company that is completely different, such as a large, blue-chip company that will benefit if oil continues to decline or stay down. Something like UPS comes to mind. Also suggest splitting your BBEP with another MLP that is more nat gas, less oil, like VNR.

    Putting all your eggs in one basket, especially something like BBEP, is silly. Please disregard everyone talking about the 2015 hedges: it buys a couple more quarters for the distribution, and that's all. The market is discounting the risk beyond 2015 if oil stays $60 or below, and that a company like BBEP runs into serious liquidity and/or balance sheet concerns that permanently trashes the equity holders. Not trying to knock BBEP -- the profit potential is certainly real -- but simply being realistic that a company with a reasonable chance of tripling your money in one year has a reasonable risk of the exact opposite. Good luck.

  • Reply to

    A look into the future of PER

    by sjsrhs Dec 30, 2014 5:11 PM
    not_totally_gray not_totally_gray Jan 5, 2015 11:34 AM Flag

    I believe they are hedged only through 1st qtr of 2015, so basically two more distributions.

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