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ClearBridge MLP and Midstream Fund Inc (CEM)

NYSE - NYSE Delayed Price. Currency in USD
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18.67+1.15 (+6.56%)
At close: 4:00PM EST

18.67 0.00 (0.00%)
After hours: 4:17PM EST

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  • Y
    Yahoo Finance Insights
    Legg Mason Partners Fund is up 6.70% to 18.69
  • Y
    Yahoo Finance Insights
    Legg Mason Partners Fund is up 6.81% to 16.00
  • Y
    Yahoo Finance Insights
    Legg Mason Partners Fund is up 5.91% to 12.79
  • A
    ALF Tanner
    My criticism of midstream partner companies in general is outlined below. The collapse in the price of oil has certainly made the situation much worse, but most of these companies have been bad investments for a long time.

    Here are some of the drawbacks to these midstream partner companies:

    1. Competition. There are too many of these companies, and they are all competing for the same projects. They tend to under bid based on optimistic assumptions. When those assumptions do not come true, their spreadsheets break, and they end up failing to make money.

    2. Projects lose value over time. These companies pay a large up front cost to develop the projects, but the projects quickly lose value as the fields they are supporting deplete. If they assume the field will deplete at 15% per year but instead it depletes at 20% per year, a project they thought was profitable could easily become a loser.

    3. Risk/reward. Midstream take all the risk, but they do not share in the reward. They pay all the money up front to develop the projects, but if the price of oil drops or the fields deplete, they are left with a money losing project as volumes quickly decline. If everything goes perfectly, they make the agreed upon fees, and nothing more. They have very limited up side on the money they make, but they have the potential of losing a lot.

    4. Return of capital. The dividends are misleading. Most midstream companies do not account properly for depreciation. They pay out a big yield, and they do not retain enough money to pay for the next projects that will replace the depreciating projects. It depends on the company, but a significant portion of the dividend is actually return of capital. The big yield is an illusion.

    5. Financial tricks. It is sometimes difficult to tell if these companies are actually earning money. They play a lot of financial games, they are very leveraged, and depreciation is a big factor. Many investors have made up special metrics to measure midstream companies. These special metrics have been a disaster. One of the worst is the "coverage ratio". It is supposed to measure how much of the dividend is covered by cash flow. It is useless because it does not account for how much of the cash flow is needed to replace depreciating assets.
  • A
    Arne
    CEM seems like a gift now. Most MLP funds own fairly similar portfolio’s. So I’m looking for the best return on share price. Discount to NAV for CEM is 8.26% ! CEM’s average NAV discount YTD has been 3.78%. A CEM return to historical NAV spread = 50% + possible upside. AND consider, the last time CEM was in this low price range it was January of 16. WTI price was $28/B. Today’s WTI price is around $58/B. Yes consider correlations to WTI have more or less decoupled. There are reasons to lengthy for this post. But increased energy demand= continued need for increased infrastructure, increased throughputs , cash flow and growing dividends. CEM looks like one of the best MLP fund values. What do you all think?
  • Y
    Yahoo Finance Insights
    Legg Mason Partners Fund is down 5.80% to 12.10
  • J
    Jean
    As an original investor in CEM I am now down only 82%! and suffered multiple dividend cuts while LM Advisors have pocketed Millions in compensation. I recommend that all investors who are contemplating an investment in Legg Mason Funds look elsewhere. The same people have been at the head of this fund since 2005. No governance from the Directors of these funds who are supposed to protect investors.
  • J
    Jean
    These "managers" have lost money for shareholders from day 1 while paying themselves handsomely
    When you have negative performance for 5 years in a row, large scale changes are need NOW!
  • J
    Jean
    Insane pricing. 80% down from IPO. Computers rule the day forcing more and more panic sales. I think
    we are near a bottom. EPD and ET are major holdings, have significant resources to pay dividends and don't
    need capital from equity markets
  • Y
    Yahoo Finance Insights
    Legg Mason Partners Fund is down 6.29% to 12.07
  • a
    afton
    They just featured CEM on this sites morning watchlist. (https:// www.tradenow.xyz)
  • A
    ALF Tanner
    I unloaded all my CEM around breakeven. I do not think the management of this fund is that bad, but I do think the sector in general has a flawed business model. The depreciation of their assets is just so fast that they have trouble making a decent profit on their investments. I think there is also a lot of competition driving down margins. These MLPs take all risk on these projects, and they do not share in the gain. The dividends seem great, but much of the return is really just return of capital. The "yield" is an illusion. It is just not a good sector to invest in.
  • H
    Horombo
    Time to add more here, folks. The products will continue to move through the pipes, no matter what commodity prices are. This dip is a gift and a great way to get an 11% yield.
  • W
    William
    Same ole same ole--shareholders take a bath and the top get the rewards---my experience thru many years dictates the divy gets cut--just saying.
  • Y
    Yahoo Finance Insights
    Legg Mason Partners Fund is up 6.98% to 11.75
  • Y
    Yahoo Finance Insights
    Legg Mason Partners Fund is up 6.79% to 12.79
  • A
    ALF Tanner
    I have been buying. The dividend is too good to resist. The time to buy high yield stocks like this is when everyone hates them.
  • E
    Ed
    Both CEM and its sister CTR very weak today. Are they expected to eliminate the distribution?
  • Y
    Yahoo Finance Insights
    CEM reached a 52 Week low at 9.67
  • J
    Jon
    GER, KMF, TYG, CEM are all levered ETF's.
    They are essentially a margin-churning ETF.

    They put in $3 for every $1 you put in.
    If the underlying assets go down 25%, you lose your money.

    These etfs have delevered in a flash crash.
    The yields aren't coming back.