MPLX

Hi-Crush and EnLink Join Growing List of MLP Simplifications

by

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

The Free Cash Flow Shortfall in the Master Limited Partnership Space

by

With the recent acceleration of master limited partnership simplification transactions, we find it appropriate to revisit the internally-generated cash flow shortfall present throughout much of the space. The table provides a breakdown of traditional free cash flow (cash from operating activities less all capital spending) relative to distributions paid, as well as a measure of the elevated financial leverage often found within the group. In case you missed it, “Nearly 60 Distribution Cuts Later, We Maintain Our View on the Hazards of the MLP Business Model.” By Kris Rosemann We think it is worth noting that the two entities at the top of this list in terms of traditional free cash flow coverage of distributions paid have significantly reduced their … Read more

Dividend Increases/Decreases for the Week Ending January 26

by

Below we provide a list of firms that raised/lowered their dividends during the week ending January 26. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week 3M (MMM): now $1.36 per share quarterly dividend, was $1.17. AGCO (AGCO): now $0.15 per share quarterly dividend, was $0.14. Air Products and Chemicals (APD): now $1.10 per share quarterly dividend, was $0.95. Alaska Air (ALK): now $0.32 per share quarterly dividend, was $0.30. ALLETE (ALE): now $0.56 per share quarterly dividend, was $0.535. Alliance Data Systems (ADS): now $0.57 per share quarterly dividend, was $0.52. … Read more

Objectivity in Analysis and the MLP Enigma

by

President of Investment Research Brian Nelson talks about how financial statement analysis keeps analysts objective. He also goes into how the distribution yields of MLPs may not reflect underlying business dynamics. Nelson also explains an inconsistency in the use of financing that supports the idea that MLPs are using external capital market issuances to fund distributions. Running time: ~15 minutes.

Video: What Cash Flow Are You Talking About?

by

President of Investment Research Brian Nelson reviews important topics from the first six episodes of “Off the Cuff,” and goes into great detail about all the intricacies of “cash flow” from traditional free cash flow to enterprise free cash flow valuation. You know you want to watch. Running Time: ~14 minutes To view Valuentum’s updated YouTube page, please see here.  Pipelines – Oil & Gas: BPL, BWP, DPM, ENB, EPD, ETP, EVEP, HEP, KMI, MMP, NS, OKS, PAA, SE, SEP, WES

MLP Speak: A Critique of Distributable Cash Flow

by

–> Handout 1: Pitfalls of Distribution Yield Analysis (pdf) –> Handout 2: Linking P/DCF to Enterprise Free Cash Flow Valuation (pdf) Let’s talk about a controversial metric that is used in master limited partnership (MLP) reporting. Just how useful is it, and should it be allowed? By Brian Nelson, CFA It’s been a few years since the fallout in the prices of most master limited partnerships (AMLP), but to me, it still feels like yesterday. We continue to have many concerns about the longevity of the business models of MLPs, and we maintain our view that the operating structure will be challenged over the long haul. New equity and debt funding (issuance) continues to, in part, fuel the distributions of most MLPs, … Read more

Alert: Trading MLPs, Adding Boeing, Adding Hanesbrands

by

Image Source: Ken Teegardin We’re on the move January 26 in the Dividend Growth Newsletter portfolio. By Brian Nelson, CFA Hi everyone, I hope that you are doing great! We’re on the move January 26 with three new additions to the Dividend Growth Newsletter portfolio. Many of you have read our “5 Shocking Stock Market Predictions for 2017,” and consistent with what we think may happen this year, we’re putting some cash to work. First, let’s talk Boeing (BA). We love the aerospace giant, and its recent dividend hike of 30%+ caught our attention in a big way. The company’s backlog is tremendous and its free cash flow generation is top notch. Boeing’s diversified exposure to both commercial aerospace and … Read more

Taxes and the Distressed MLP Investor

by

Image show above: Performance of the Alerian MLP ETF. “Perhaps the worst thing about MLPs is that investors can spend more time doing and thinking about tax-related items than actually evaluating the businesses of the underlying entities. This could result in poor investment decisions.” – Brian Nelson, CFA By Brian Nelson, CFA What a sensitive topic for many… Our team presented at the Chicago chapter of the American Association of Individual Investors (AAII) last weekend. It is always an honor and a privilege to have the opportunity to present to such wonderful people! They ask so many great questions. (By the way, I’m working on my schedule for 2017, so if you’d like our team to speak on a topic … Read more

Refining Stocks Are Shaping Up to Have a Strong 2013

by

A number of refiners recently reported strong results in their respective fourth quarters. We had been watching the group’s tremendous performance via Phillips 66 (PSX), a holding in our Dividend Growth portfolio, but let’s dig into the firm’s peers to highlight a few industry trends. Valero On Tuesday, Valero (click ticker for report: ) announced a “blowout” fourth quarter, with earnings growing to $1.82 from $0.08 per share, trouncing the consensus estimate. Revenue was roughly flat, so what drove such substantial earnings growth? CEO Bill Klesse said it best: “Also in the fourth quarter of 2012, we replaced all imported light foreign crude oils with cheaper domestic crude oils at our Gulf Coast and Memphis refineries. Since we expect U.S. … Read more

Dividend Increases/Decreases for the Week of November 1

by

Below we provide a list of firms that raised their dividends during the week ending November 1. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week                          AbbVie (ABBV): now $1.64 per share quarterly dividend, was $1.55. Adecoagro (AGRO): now $0.174 per share semi-annual dividend, was $0.168. Amcor (AMCR): now $0.1275 per share quarterly dividend, was $0.1250. Associated Banc-Corp (ASB): now $0.23 per share quarterly dividend, was $0.22. Atlas Energy Solution (AESI): now $0.24 per share quarterly dividend, was $0.23. Balfour Beatty plc (BLFBY): now $0.0803 per share semi-annual dividend. Banco … Read more