There's blood on the streets

[NW-Bound]

I happened to look up the price of AMLP. It dropped -6.35% today. Holy mackerel! Blood is running ankle-deep in the oil patch.

This brings it down to 60% of its high 1 year ago. What happened today to cause a further drop?

[LOL!]

Sometimes such a move is because a stock went ex-dividend, but not in this case.

[ESRwannabe]

Quote:

Originally Posted by NW-Bound I happened to look up the price of AMLP. It dropped -6.35% today. Holy mackerel! Blood is running ankle-deep in the oil patch. This brings it down to 60% of its high 1 year ago. What happened today to cause a further drop?

Dunno. The only thing that went on that day was a merger/acquisition of two companies in the index. I don't think that was it.

It was up like 9% yesterday. Up 3% today.

I don't think the market is behaving rationally when it comes to oil companies. So I'm not necessarily worried about understanding the gyrations.

[Rickt]

Just received a cold call from a lady trying to sell me a partnership in oil drilling venture in Abilene TX. When I asked her why would I want to get involved in oil drilling with oil at its lows and many wells shut down she responded "Oh we've been drilling all along and are very profitable" I guess she is profitable selling partnerships to suckers

[NW-Bound]

Quote:

Originally Posted by ESRwannabe I don't think the market is behaving rationally when it comes to oil companies. So I'm not necessarily worried about understanding the gyrations.

Unless you are a strict buy-and-holder, I believe that it is important to know the reason, or the lack thereof, for market swings.

I like to see the market over-reacting or behaving irrationally. How else does one have a chance to buy low/sell high?

[ESRwannabe]

Quote:

Originally Posted by NW-Bound Unless you are a strict buy-and-holder, I believe that it is important to know the reason, or the lack thereof, for market swings. I like to see the market over-reacting or behaving irrationally. How else does one have a chance to buy low/sell high?

From what I understand the reason oil companies went down that day had to do with Russia (Syria) and oil inventories.

Anyway, who knows. *shrug*

I have no money to invest right now. So I don't watch it that closely. Next month I'll have more money come in from dividends and then I'll look around to see what's on sale.

[ESRwannabe]

Quote:

Originally Posted by NW-Bound Unless you are a strict buy-and-holder, I believe that it is important to know the reason, or the lack thereof, for market swings. I like to see the market over-reacting or behaving irrationally. How else does one have a chance to buy low/sell high?

Also I'm not a buy and holder that is just oblivious about what's going on. However, when I use an index on a sector there is not much concern keeping a close eye on it.

I know that midstream pipelines are necessary for the US and the entire sector is not going away anytime soon (my life time probably). So I don't have much incentive to watch it when I have no money to invest. Even with individual companies I generally wait for the quarterly numbers to come out to pay attention (or when I have money to invest).

I did look into the companies that announced acquisitions that day and they were both bullish on the midstream business. So that was good news.

[ESRwannabe]

I guess I will just spam my thread with more posts... lol

I figured I will mention that next month when I get some dividends in (around $5k) I will start building up a position in KMI which is Kinder Morgan.

KMI used to be the largest MLP, but they restructured last year as a C-corp. So they are no longer in the Alerian MLP index.

For anyone that wants to invest in midstream sector, KMI is the largest company ($57 billion) and since they are a c-corp there are no K1s to deal with.

Right now KMI has a yield of 6.97%. The CEO has stated that the dividend should be going up by 10% per year for the next year or two. KMI, like most midstreams, have long term contracts. So they already know how much money they will be getting.

The companies that merged the other day are Energy Transfer Partners and Williams. As part of this deal Energy Transfer is also going to create a c-corp holding (ETC). So people that want to buy in that way can. The underlying MLP companies will still be MLPs so you can buy that way too (ETP, WPZ, SXL).

Another merger/acquisition that happened recently is MPLX buying Markwest. MPLX is sponsored by Marathon Petroleum (i.e. general partner).

Anyway, in both situations the companies are bullish on the midstream business. Companies are taking advantage of the current panic in oil to do M&A.

[ownyourfuture]

Quote:

Originally Posted by ESRwannabe I guess I will just spam my thread with more posts... lol I figured I will mention that next month when I get some dividends in (around $5k) I will start building up a position in KMI which is Kinder Morgan. KMI used to be the largest MLP, but they restructured last year as a C-corp. So they are no longer in the Alerian MLP index. For anyone that wants to invest in midstream sector, KMI is the largest company ($57 billion) and since they are a c-corp there are no K1s to deal with. Right now KMI has a yield of 6.97%. The CEO has stated that the dividend should be going up by 10% per year for the next year or two. KMI, like most midstreams, have long term contracts. So they already know how much money they will be getting.

It might be a smart move to start building up a position in Kinder Morgan. Unfortunately it's too late for me. I bought it about five years ago and I've been pummeled since they changed from a MLP to a C-corp last year.

Went from a very nice profit, to down about 23.00%
Was also raped on taxes for 2014. OUCH!!

I'm going to hold, and hope this is the bottom.
But I don't trust Richard Kinder any further than I could throw him.

[ESRwannabe]

Quote:

Originally Posted by ownyourfuture It might be a smart move to start building up a position in Kinder Morgan. Unfortunately it's too late for me. I bought it about five years ago and I've been pummeled since they changed from a MLP to a C-corp last year. Went from a very nice profit, to down about 23.00% Was also raped on taxes for 2014. OUCH!! I'm going to hold, and hope this is the bottom. But I don't trust Richard Kinder any further than I could throw him.

Yeah that had to hurt! I'm not sure why they wanted to become a c-corp. I don't see how it helped.

I guess one good thing about the AMLP index I use is that I won't have any tax shocks as AMLP is run as a c-corp already. So I don't have any deferred taxes to worry about.

I don't suppose you have any info on why they went full c-corp? In my view the MLP structure is better for raising capital.

[hesperus]

Yes, KMP (now KMI) has been a difficult one to hold over the last year. However, yesterday was a good day for most of my MLP's. One of them (EPD) popped about 12% or $19K in value just yesterday, and is now up 36% from basis. Searched the news, but could not deduce what the reason was for that one particular MLP to bounce like that.

[Running_Man]

Quote:

Originally Posted by ESRwannabe I guess I will just spam my thread with more posts... lol I figured I will mention that next month when I get some dividends in (around $5k) I will start building up a position in KMI which is Kinder Morgan. KMI used to be the largest MLP, but they restructured last year as a C-corp. So they are no longer in the Alerian MLP index. For anyone that wants to invest in midstream sector, KMI is the largest company ($57 billion) and since they are a c-corp there are no K1s to deal with. Right now KMI has a yield of 6.97%. The CEO has stated that the dividend should be going up by 10% per year for the next year or two. KMI, like most midstreams, have long term contracts. So they already know how much money they will be getting. The companies that merged the other day are Energy Transfer Partners and Williams. As part of this deal Energy Transfer is also going to create a c-corp holding (ETC). So people that want to buy in that way can. The underlying MLP companies will still be MLPs so you can buy that way too (ETP, WPZ, SXL). Another merger/acquisition that happened recently is MPLX buying Markwest. MPLX is sponsored by Marathon Petroleum (i.e. general partner). Anyway, in both situations the companies are bullish on the midstream business. Companies are taking advantage of the current panic in oil to do M&A.

The CEO of KMI can say whatever he wants but the facts are this:

They have expectations of 2 billion in net profits for next year which would be a record. They have 41 billion in long term debt with 1.7 billion of interest (4.1% interest) they have rolling large portions of that debt to refinance. A 2% increase in interest rates with normalization from FED will subtract nearly a billion from profits, dividends are 4.7 billion dollars, Capital spending is projected to be 4 billion per year. 8 billion of dividends and capital spending and 2 billion of profits before tax - 1.6 billion after tax. How does KMI get great projected "cash flow" ----2 billion of depreciation -- 1.6 billion of earnings after tax and now you have to borrow and sell shares for 4.7 billion.

I would never count on a dividend that is provided for in this manner, this is near Ponzi like.