MMP

MLPs Starting to Adopt Free Cash Flow?

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Image shown: Since mid-June 2015, the price of an ETF tracking the midstream MLP energy space (AMLP) has fallen more than 40% while the S&P 500 (SPY) has rallied more than 30%. No changes to simulated newsletter portfolios. By Brian Nelson, CFA Hi everyone! Hope you are having a nice start to the week. I have some great news for investors. In my lengthy piece from last Tuesday, which can read here, I talked about how master limited partnerships (MLPs) may be starting to embrace the very important metric free cash flow. If you remember, free cash flow is generally calculated as cash flow from operations less allcapital spending.  On the other hand, distributable cash flow, or the most widely-disseminated metric across midstream equities, generally excludes growth capital … Read more

Kinder Morgan Reiterates Dividend Growth Intention

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Image shown: Kinder Morgan’s pipeline network and estimated breakdown of 2018 EBDA. Source: Kinder Morgan investor presentation Pipeline operator Kinder Morgan has benefited from a significant increase in natural gas supply and demand of late, and it expects more of the same in 2019. Management continues to execute on its capital allocation priorities, and it reiterated previously-announced guidance for dividend growth in the years ahead.  By Kris Rosemann 2018 was a transformative year for Kinder Morgan (KMI). The once-troubled pipeline operator has come a long way in terms of capital allocation since its massive dividend cut in late 2015, but management continues to expect significant growth in the payout in the years ahead. The company’s growth in 2018 (fourth quarter … Read more

Valuentum Stock Screeners

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This article was sent to members via email December 29. That email can be accessed at the link that follows this article. By Brian Nelson, CFA Hi everyone, I wanted to provide an update with respect to Valuentum’s stock screeners. We believe our stock screeners are among the most robust when it comes to providing forward-looking data, or data that is important with respect to the investment decision-making process. We publish screens in each of the monthly newsletters, but we also provide a basic weekly screener for download on the left column of the website, “Download Weekly Stock Screener (xls) — login required.”   We also have other products. The more robust DataScreener, for example, is part of the quarterly Financial … Read more

Market Mayhem — Alerts for Members

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During these extremely volatile times, it’s important to stay focused. On December 15, we informed all of our members to “Pay Attention.” Shortly thereafter, we notified members of the potential for a stock market technical breakdown. This morning, we offered a pre-market briefing about the importance of thinking about portfolio protection. For Best Ideas Newsletter and Dividend Growth Newsletter members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=e2406cd6-c113-4344-8731-493f33fc44a4&id=preview For High Yield Dividend Newsletter members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=b3ba530f-38b3-489a-ac96-2961dca89c6b&id=preview For Exclusive members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=ba6d90c0-4433-48b2-9b8a-aac4ddf9006e&id=preview We’re here for any questions. Please just let us know how we can help! Kind regards, Brian Nelson, CFA  brian@valuentum.com

Midstream Energy Pounded, MLP Distribution Cut at Golar LNG Partners

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Image shown: The midstream MLP space continues to suffer. Performance of the group since mid-June 2015. By Kris Rosemann and Brian Nelson, CFA There aren’t many calls that have been as large as Valuentum’s was in midstream energy in mid-June 2015. Midstream energy equities comprised some $500-$600 billion in market capitalization at their peak, and our work was prominently highlighted in Barron’s for all to see. Within the High Yield Dividend Newsletter, we’ve received great praise in continuing to highlight the risks of the space, but we can’t change that high yield, itself, is risky, as almost by definition, it means that companies will have poor Dividend Cushion ratios. This doesn’t mean that you won’t be able to find opportunities … Read more

Hi-Crush and EnLink Join Growing List of MLP Simplifications

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Image Source: EnLink transaction presentation A number of master limited partnerships continue to transition to more simplified structures as they attempt to become increasingly nimble organizations. By Kris Rosemann The ongoing trend of master limited partnership simplification transactions continued October 22 as proppant and logistics solutions provider Hi-Crush Partners (HCLP) acquired its general partner and slash its quarterly distribution to $0.225 per unit from $0.75 per unit. The now C-Corp used 11 million newly issued units to acquire Hi-Crush Proppants LLC for a total consideration of $96.25 million and eliminated its incentive distribution rights in doing so. Rationale cited for making the change is very similar to other similar transactions, including a lower cost of capital, wider appeal to a range … Read more

Update on 5 Top Energy Stocks: KMI, ETP, EPD, MMP, XOM

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We generally like the diversification provided in the Energy Select SPDR ETF (XLE) as one way to consider exposure to the energy resource arena, but let’s get the highlights on some of the most-viewed energy-related ideas on our website: Kinder Morgan, Energy Transfer Partners/Equity, Enterprise Product Partners, Magellan Midstream, and Exxon Mobil. By Kris Rosemann and Brian Nelson, CFA An estimate of intrinsic value is as important as a view that shares of a company are undervalued or overvalued, and we think an application of a fair value estimate range is most helpful. The question, “What is a company worth?”, remains paramount to any investment thesis. The fair value estimate is the outcome of any research and analysis. We’d view … Read more

ETF Analysis: Energy

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The Days of the MLP Model Are Numbered

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By Brian Nelson, CFA On August 24, Enbridge (ENB) announced that it would enter into a definitive agreement under which the entity would buy Spectra Energy Partners (SEP) at an exchange ratio of 1.111 common shares of Enbridge for each common unit of SEP, a near-10% increase from the exchange ratio announced a few months ago. As we have outlined in the past, most recently with respect to the following discussion on the Energy Transfer Equity (ETE) and Energy Transfer Partners (ETP) tie up, “ETE-ETP Rollup and Implied Distribution Cut,” consolidations are slowly eliminating the MLP model via simplification efforts and many combinations are coming with implied distribution/dividend cuts, something that couldn’t have been imagined in years prior. The story … Read more

ETE-ETP Rollup and Implied Distribution Cut

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We continue to believe that the MLP business model may be a goner, and the recent ETE-ETP rollup is the latest example. Though new capital may come into the space on expectations that there will be premiums in unit-for-unit rollup deals, most of the combinations are coming with implied distribution cuts. By Brian Nelson, CFA On August 1, Energy Transfer Equity (ETE) announced that it would roll up Energy Transfer Partners (ETP) in a unit-for-unit merger exchange. Energy Transfer Equity’s incentive distribution rights (IDRs) in Energy Transfer Partners will be eliminated, and the deal is scheduled to close in the fourth quarter of 2018. Energy Transfer Partners unitholders will receive 1.28 common units of Energy Transfer Equity for each common … Read more