Look at LINE in 2007, when the going rate on a government bond fund was 5%. There could be a knee jerk reaction, but higher interest rates in the past didn't seem to dampen buying. Of course, the whole industry is so new there's not a lot of history in terms of reaction to rates in "normal" market environments.
Yeah, both had run up during the year, tax selling? If so, a more restrained use of the sell button might have produced better results!
Presumably from now on they will do offerings in tandem, although how much of LINE vs. LNCO they would offer isn't obvious or intuitive, probably a judgement call as to which is more popular. To LINE I don't see how it matters which one is used, so long as the price is close. Right now there's a 50 cent advantage to LINE, but I don't know if that would be enough to motivate them to avoid a LNCO offering. Maybe they will reserve LNCO shares for more C corp mergers, who knows? To us, it makes no difference at all.
Agree, that's much too low, LINE during the "calm" periods after the financial crisis, and before the controversy, yielded in the 7's. BBEP is much smaller and has a checkered past, you would think it would top out in the low 8's at best. Assume the distribution goes up to, say, $2.30 and that gives you an absolute maximum of $28, but probably $25 is more realistic. I don't think anyone here would complain too much about that.
Those 2007 prints are astonishing, given that the distribution was lower, and govt. bond money market yields were around 5%! That's where I had all my money parked in 2007, 100% in a Vanguard fund. LINE's chart is similar until the crash, but afterwards it held up better, maintaining the distribution, and increasing it 30-35% from then to now. BBEP's distribution is only up 10%. In any case, the market price is going to be based on the future, not the past.
I think there was suppose to be a "from" in there someplace. It must have been a private holder, otherwise we'd be hearing from the other end.
Well, you have a point. I would be less in stock in that case, and more in calls. If you're swinging for the fences, may as well use the best bat.
Longer than that, I don't know where the lines cross on the chart, where you can't make accretive acquisitions any longer given the expanding base of legacy unit holders, but none of these upstreams have even reached the point where the reserves acquired by the initial unit holders are running out, that's many years away, and that's a relatively small slice of the pie anyway. I would guess this upstream game could go on for a couple of decades before cracks started to appear in the walls. That's probably longer than I have left, so I'll leave that problem to my heirs!
I started the year with a small $50K position in LINE and ended with nearly a 100K profit in units and 2016 calls (so far), and another $40K or so in cash from intermediate trading when it was up and down in the $20's. Without Hedgeye and Barrons, none of that would have happened, never mind the money I made in collateral damage, particularly in BBEP, where I just killed. What can I say, thanks Kevin, you made my year. Now go get run over by a Zamboni.
In my opinion MILL is a speculative grade security, and you should have no more than 5% of your funds invested in speculative issues . . . total.
Twenty five years in the profession, I had exactly one (1) schedule D audited, and that was in a TCMP (a type of audit they used to do randomly, where everything was checked for statistical purposes, even birth certificates of dependents).
Sole proprietorships, rentals and employee business expenses, aside from very unusual situations, that's what they look at in desk audits. Auditors are very low level IRS personnel, they usually have no professional standing, and have only limited research sources (it was common for them to use the "Master Tax Guide", a condensed commercial product).
It isn't much better at the agent level, it's the lowest level profession for a CPA on the planet. I've never encountered an agent who could really be considered competent in a technical sense (knowing tax law).
You could of course do something with LINE/LNCO, if you could make the numbers work. There's no way LNCO is substantially identical with LINE, it's a taxable corporation, not an MLP (even though it owns nothing but LINE). At least, one could certainly take the position given the lack of any rulings on something like that.
Yeah, they've already discussed (in call q&a's) how they calculate DCF, and how they'd have to re-think that if they actually did growth capex. They didn't come right out and say they wouldn't charge growth capex to DCF, but of course they won't, it would blow the calc if the number was anywhere material (and it sounds like in the future, it will be).
Of course, there's still the open question of whether the SEC's input into LINE's disclosures will be imposed on everyone else. It's pretty hard to see how they wouldn't do that, unless they just went back to sleep after they were finished with LINE. Possible of course, they are a government agency, incompetent by definition, but they might be working on a general pronouncement.
Maybe, but even if it plumbs the depths, is there a trade here? Its future depends on trusting management to make acquisitions with the newly found leverage gap, I've seen estimates from analysts of $200-400M, plus they still have that $200M midstream investment that at some point you would think they would fletch off to avoid being a hybrid entity. The trade argument assumes this will become oversold due to uncertainty and many times burned fingers, but that a year from now the distribution will be safe and growing. It's a possible outcome, but management has been terrible, you have to rely on them doing the right thing from here on out, not overpaying for properties, in a very competitive acquisition environment. That's not a trade, that's a bet. I'm going to sit this one out, regardless of where this falls.
20 year life, 10 years of drilling, yeah, there's value there. But I'm not a fan of this change in direction. VNR now takes drilling risks, same as LINE, and will allocate money to growth capital for the first time? That's counter to their entire philosophy. And they're doing it in dry gas, with someone else making all the decisions, that's the worst part.
My golden idol is tarnished, I would have preferred they did compete for oily assets, some nice safe Permian field that adds 10 cents to coverage after the inevitable offering. This management didn't use to roll dice . . . with my money.
Probably nothing, not unless you hold a trading position, then taking profits today makes sense, come back in at the offering.
Yeah, well, this one is a very long term deal. I'm not thrilled they are relying on other people so much, their interest is very small and they have no hands on. I'd prefer they controlled their own fate. And, I'd prefer oil, but that's just me. BTW, there will be an offering, imho.
Okay, you worned them. But unlike you, I'm sure they can Google "MLP IRA", so probably they didn't really need your worning.
I understand the urge to chat on the internet, I'm hardly immune from the lure. What I don't understand is why someone would take the risk of exposing themselves by talking about things they know nothing about, or why they don't spend the five minutes it would take to educate themselves first. They're drawn to the internet, but they don't how to use it. Being completely anonymous, having a world of information at your fingertips, and all the time you need to formulate a response without being challenged, you could pretend to be an expert on . . . anything, and totally pull it off. Instead, they choose to look like a fool. Baffles me.