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Wednesday, January 31, 2007

Amerigas (APU) reports earnings this morning and a distribution but no increase.

Meanwhile some pre-open action in Calumet Products Partners (CLMT) on the Goldman downgrade...some trades at 44.01 down 1.79.

10 year bond opens slighty lower on the rate side at 4.86 before the GDP number.

2 comments:

mike said...

Can anyone explain the DEP IPO? Why does Dan Duncan (chairman of EPD, EPE, and ostensibly TPP) need another MLP? The press release only talks in vague terms about moving cash and assets between EPD and DEP. Was DEP setup to take advantage of the low-tier split (presumably 2%) that would make its cost of capital lower, presumably allowing it to acquire assets that EPD can't?

mike

Anonymous said...

DEP doesn't have any IDRs. DEP seems to be quite similar to CPNO to me, except at a much better yield. From the prospectus, there seems to be potential for organic growth. However, it is hard to know exactly what kind of growth to expect without any analyst estimates. B/c DEP doesn't have any IDRs, DEP only needs to grow its cashflow half as fast as KMP to justify a similar multiple. Currently, DEP's yield is higher than KMP's so I think it is undervalued. Acquisitions should be cheaper DEP b/c of its lower cost of capital. I assume EPD just wanted to monetize some assets to pay for capital expansions. I don't think DEP's assets are exactly high growth, otherwise I expect EPD would've kept them. DEP should do very well, imo.