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Bob Cecchini
EEQ was one of the MLP Profits portfolio casualties when you became Income Millionaire, but I wonder if you could provide some insight as to why the stock's performance has been so terrible. When the FERC tax ruling was announced, most MLPs dropped by 5% or so and then rebounded 2-3% the next day. EEQ inexplicably drops 15% the first day then another 6% the next day. It seems to be priced for bankruptcy. Any comments would be appreciated.
Ari Charney
Hi Bob,
Although I don’t track EEQ, I do see that the MLP subsidiary that is its main investment, EEP, reported that the FERC rule change could cause this year’s distributable cash flow to drop about 9.4%, based on the respective midpoints of the current and former guidance ranges. Further, EEP says that would mean distribution coverage would fall to around 1.0x. Recall that EEP cut its distribution last year to improve distribution coverage and shore up its balance sheet. Now it’s situation will remain tight, despite that move. The MLP expects to challenge this ruling, and others plan to do so as well.
Stock Talk
Bob Cecchini
EEQ was one of the MLP Profits portfolio casualties when you became Income Millionaire, but I wonder if you could provide some insight as to why the stock's performance has been so terrible. When the FERC tax ruling was announced, most MLPs dropped by 5% or so and then rebounded 2-3% the next day. EEQ inexplicably drops 15% the first day then another 6% the next day. It seems to be priced for bankruptcy. Any comments would be appreciated.
Ari Charney
Hi Bob,
Although I don’t track EEQ, I do see that the MLP subsidiary that is its main investment, EEP, reported that the FERC rule change could cause this year’s distributable cash flow to drop about 9.4%, based on the respective midpoints of the current and former guidance ranges. Further, EEP says that would mean distribution coverage would fall to around 1.0x. Recall that EEP cut its distribution last year to improve distribution coverage and shore up its balance sheet. Now it’s situation will remain tight, despite that move. The MLP expects to challenge this ruling, and others plan to do so as well.
Ari
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