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Robert 111
Thanks for updating prices of the portfolio holdings. If an investment was made in each holding in an equal amount, it would be interesting to see what the whole portfolio has done for the day and also from inception of the fund.
Igor
I really liked your insightful thoughts on ETP and ETE yesterday during the Energy Chat . After seeing and experiencing the adverse impact on valuation and yield with the ETP/SXL merger what do you think is the likelihood that Kelcy will collapse ETP into ETE to financially engineer a reduction in the current 10%+ yield. Would this further crush uniholder value?
Thanks
Mark
Ed
Mark,
Just checked the current price of ETP and it is now yielding 11%. At its current price and yield, ETP would appear to have little ability to finance future growth projects and the market seems to be predicting that it will be merged with ETE. In addition, the market seems to be predicting that the terms of the merger will be favorable to Kelcy who owns ETE and very unfavorable (i.e. another substantial dividend cut) to unit holders of ETP. From my perspective, it doesn’t look good for unit holders of ETP.
What’s your opinion, Igor?
Igor Greenwald
That’s fair in terms of the consensus guess I think, and as noted in response to Mark’s question there is a lot of uncertainty in the price of ETE as well as ETP. Resolving it would be positive for both. Alternately, not resolving it, using private equity, etc., (even if more expensive) as near-term bridge financing and just delivering the expected coverage by early next year would work too. This isn’t a crisis, and the problem has more than one acceptable solution in today’s market environment, I think. I mean, no one likes to be in the red on an investment, but that’s not a crisis and it’s not like they are out of options. I recommend patience.
Thanks, Mark. I think the likelihood keeps rising but not sure it would neccessarily “crush unitholder value.” I mean, you’ve seen how it trades already, and while oil prices and MLP malaise are part of it the long-term financing fears are in there somewhere too, I think. Allaying them ought to be worth something. I’ll also note that a distribution cut at the affiliated MLP after the sale of IDRs hasn’t worked out too terribly for WMB/WPZ.
Igor
Can we get your thoughts on ETE and ETP per my post from last week and Ed’s follow on comments.
Could you also comments and the latest Federal Judge ruling on possible violations by the Army Corp of Engineers on the NDAP.
ETE has collapsed to $16.
How do you think this will play out?
Thanks
Mark
Igor Greenwald
Done on the general situation; as for the ruling requiring the Army to redo parts of its environmental impact assessment, I’d be shocked if that led to an interruption on an active pipeline.
Igor
Can we get your thoughts on ETE and ETP per my post from last week and Ed’s follow on comments.
Could you also comments and the latest Federal Judge ruling on possible violations by the Army Corp of Engineers on the NDAP.
ETE has collapsed to $16.
How do you think this legal challenge will play out?
Thanks
Mark
Stock Talk
Robert 111
Thanks for updating prices of the portfolio holdings. If an investment was made in each holding in an equal amount, it would be interesting to see what the whole portfolio has done for the day and also from inception of the fund.
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Mark Drum
Igor
I really liked your insightful thoughts on ETP and ETE yesterday during the Energy Chat . After seeing and experiencing the adverse impact on valuation and yield with the ETP/SXL merger what do you think is the likelihood that Kelcy will collapse ETP into ETE to financially engineer a reduction in the current 10%+ yield. Would this further crush uniholder value?
Thanks
Mark
Ed
Mark,
Just checked the current price of ETP and it is now yielding 11%. At its current price and yield, ETP would appear to have little ability to finance future growth projects and the market seems to be predicting that it will be merged with ETE. In addition, the market seems to be predicting that the terms of the merger will be favorable to Kelcy who owns ETE and very unfavorable (i.e. another substantial dividend cut) to unit holders of ETP. From my perspective, it doesn’t look good for unit holders of ETP.
What’s your opinion, Igor?
Igor Greenwald
That’s fair in terms of the consensus guess I think, and as noted in response to Mark’s question there is a lot of uncertainty in the price of ETE as well as ETP. Resolving it would be positive for both. Alternately, not resolving it, using private equity, etc., (even if more expensive) as near-term bridge financing and just delivering the expected coverage by early next year would work too. This isn’t a crisis, and the problem has more than one acceptable solution in today’s market environment, I think. I mean, no one likes to be in the red on an investment, but that’s not a crisis and it’s not like they are out of options. I recommend patience.
You must be logged in to post to Stock Talk OR create an account
You must be logged in to post to Stock Talk OR create an account
Igor Greenwald
Thanks, Mark. I think the likelihood keeps rising but not sure it would neccessarily “crush unitholder value.” I mean, you’ve seen how it trades already, and while oil prices and MLP malaise are part of it the long-term financing fears are in there somewhere too, I think. Allaying them ought to be worth something. I’ll also note that a distribution cut at the affiliated MLP after the sale of IDRs hasn’t worked out too terribly for WMB/WPZ.
You must be logged in to post to Stock Talk OR create an account
You must be logged in to post to Stock Talk OR create an account
Mark Drum
Igor
Can we get your thoughts on ETE and ETP per my post from last week and Ed’s follow on comments.
Could you also comments and the latest Federal Judge ruling on possible violations by the Army Corp of Engineers on the NDAP.
ETE has collapsed to $16.
How do you think this will play out?
Thanks
Mark
Igor Greenwald
Done on the general situation; as for the ruling requiring the Army to redo parts of its environmental impact assessment, I’d be shocked if that led to an interruption on an active pipeline.
You must be logged in to post to Stock Talk OR create an account
You must be logged in to post to Stock Talk OR create an account
Mark Drum
Igor
Can we get your thoughts on ETE and ETP per my post from last week and Ed’s follow on comments.
Could you also comments and the latest Federal Judge ruling on possible violations by the Army Corp of Engineers on the NDAP.
ETE has collapsed to $16.
How do you think this legal challenge will play out?
Thanks
Mark
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