So what's going on at WMIH is not unique. It looks like a "recipe" that the banksters perfected (after who knows how many years of experience) to create billions in profits for themselves.
"A SHELL OF ITS FORMER SELF" is true. Instead of hundreds of billions in loan portfolio, it merely has a few billion in real estate, waiting to be sold for billions in profits. They are just like K-Mart. Both became "de facto REITs". Their real estate portfolio is worth "only" a hundred million (in bankruptcy court) just like our NOLs are worth just 100 million (Walrath's official decree). But in REALITY, their real estate and our NOLs are a good multibillion dollar match for each other).
They bought Bluestem so they can show a billion $ in annual sales.
Billions in appreciated (but hidden) real estate
Billions (but hidden ?) in WMIH NOLs
Mix the sausage up...and what is coming out ?
A big NASDAQ listed company with billions in market cap. and Eugene Davis as CEO.
I remembered from the Wells Fargo presentation MID teens annual growth in distributions from 2014 to 2017. So, I pulled out the slides they handed out, and on page 7 there is a big chart saying mid teens annual distribution increases from 2014 to 2017. Then at the bottom it says "low teens 2014/2015; ~ high teens 2016/2017". I can't wait to see those "high teens" in 2016 !!
Now one must remember that MEP is really tiny for the big Enbridge, so they can make it have any kind of growth they want with little effect on them.
Do you have a link to anywhere in writing where they said "low" teens ? I'm curious if they did "soften" their position, although it would only be a few percentage points, but still, it would mean its not "etched in stone".
As for "second tier" I think what you mean is what I was saying, that they connect directly to the hundreds of individual well heads, and that business is susceptible to an individual driller's demise (its also good because they can raise fees on the surviving drillers who have almost no alternative as the investment of connecting to their individual well head is too high for any new competitor). The long range (e.g. Texas Express) pipes don't have this problem, as they consolidate thousands of small, local, streams into one big long range pipe. This is the type of pipes that Enbridge will be dropping down.
And yes, based on OUR purchase prices, the yield will be amazingly good (its not bad even now !) in a few years. But the share price will much higher (perhaps double) such that the "current yield" (for new investors) will be "normal" market rate. I can't really predict what normal market rate would be in a few years. But 7% is not an unreasonable guess.
Under that "guess" our shares will more than double in price.
In theory, since MEP is "just a pipeline" it shouldn't matter. But in reality, there are several complications:
(1) Some deals they make with producers involve MEP "keeping" the liquids they extract as their fee, so for those, there is a big depndance on the commodity price
(2) As energy prices drop (both oil and gas), there is a risk that some drillers might shut down (voluntary or involuntary) in which case MEP will lose the business of gathering/transporting/processing the gas from those drillers. Even if MEP's fee was fixed (independent of commodity prices) it goes to zero for such drillers.
This is why we have been going down a bit with the crash in energy prices. But the good news, as Fishin' pointed out, is that our "big daddy" will make sure we can only increase our profits/DCF/dividends. And, to keep their word, they'll make sure the divis go up by 16%. Where did you hear "low" teens ? I heard 16% from Enbridge, and "mid" teens (same thing as 16%) from MEP.
Capmark was owned by KKR and Goldman Sachs. After the reorg, they got rid of the debt, and are very profitable. They had tons of real estate that were on the books at 1/10 of the real value, and pased these on to the new owners (previous debt). I'm not sure who owned the debt that made a killin on CapMark's BK, but I'm guessing (just guessing!) KKR and Goldman bought these cheap and made a killing.
You should apply for a job on the new Seinfeld show. You're perfect for the role of "Cosmo Kramer." Although you'd probably also be a pretty good "George". That's what has changed.
We won't forget to thank the lord for delivering us from our ruthless enemies. In 2015 we each promise to do a significant amount of charity, donating cash or the sweat of our brow towards helping the weak, sick, or otherwise unfortunate. This is what distinguishes us from our greedy enemies. Amen.
Credit Swiss came out with a very negative report on MEP saying that management disappointed them, then they said the stock is worth $21/share. Now the management has been replaced. I think MEP is worth $25 easily. Where else can we get such a solid yield with 16%/year GROWTH ?! The only company that comes close is OLP, but it is smaller and a bit more risky, renting commercial real estate.
If the investigators report shows that WPZ was negligent in any way (enough that 1 employee was drunk ?), then the insurance company won't have to pay for the damages due to the huge explosion at Geismar, and WPZ will lose almost a billion $. Will that bankrupt WPZ ? Will WMB (who rammed this troubled asset down WPZ's throat at a hefty price) step in to bail out WPZ ?
The giant Enbridge owns over 50% of this stock, and Enbridge will make sure earning are always higher and higher until MEP is $50/share (and then they will sell !!). Enbridge can drop down valuable assets for bargain prices, and MEP can finance them at ridiculously low interest rates. Its rigged.... but we little guys can join in for a free ride.
I don't go around calling people "idiots", but WPZ is in the 40's now, like these wise posters were predicting a week or more ago. And I agree with them that this artificially imposed merger does resemble a scam. They are substantially reducing our distributions, while previously there was a promise to increase them. A lot of investors (mainly retired) need to be able to rely on distributions, and some degree of certainty that they won't be cut, to maintain their day to day life. Now WPZ has shown that they cannot be trusted anymore. Its been a good 10 years, but its over.
Wait until the news comes out about the insurance company refusing to pay 500 million damages for the huge explosions last year on that troubled facility that WMB rammed down WPZ's throat. I forgot how to spell it: Geizner ?
This POS will definitely go down to the 40's, and after the scam "merger" the equivalent price of old WPZ shares could be in the 30's. There are several lawsuits by WPZ shareholders who realize how badly they are getting shafted, and maybe they can stop the rip off ? Otherwise we will short this. I like how after dropping the dividend by 20% they try to smooth it over by saying: "don't panic, if we have a good year, we will raise it back 10%", yeah, right, like we're going to trust them a second time !
(1) Distribution will go down almost 30%
(2) Tangible assets per share will drop even moire.
In my humble opinion, its like stealing 30% of our money. I thank whoever was manipulating the share price up today to make it look attractive. I dumped and put my money in MEP. MEP is managed by Enbridge, who were voted most trustworthy management. And they promised to INCREASE distributions at an annual rate of 16%, and so far have done so (4% per quarter). Also, MEP is very conservative, with just gas pipelines. No processing or "cracking" which depends on the crack spreads which can go up and down. Distribution is locked in at long term contracts, with inflation adjustments, and volume growth (as the population grows, or as utilities convert polluting coal to clean NG).
Well, I thank Williams for a good ride these past years, but all good things come to an end. My new "horse" for riding the next few years is MEP.