ATLAS PIPELINE MAKES A BIG PURCHASE
BOMB THREAT TO BUCKEYE AVERTED!.
Now we know that somebody knew something about Atlas Pipeline Partners (APL) as they are making a big asset purchase from Anandarko. More importantly they are pre-announcing distributions for next year as they plan to go to 3.80 to 4 dollars per unit from the current $3.44 annual. Holders of Atlas Holdings (AHD) will see their distributions go up 70% in 2008. Atlas America (ATLS) will be a big winner gain on this news. 2 weeks ago the stock jumped 7 points on the Atlas Resouce (ATN) big purchase. As per Atlas Pipeline(APL) it is one of the highest yielding MLPS at just under 7% perhaps becuase it has a history of uneven distribution growth and failed mergers. But this deal changes all that. A 6% yield takes this stock to 65 bucks. Atlas Amercia (ATLS) is up 3 and change in the premarket.Atlas Holdings (AHD) is bidding up 2 in the pre-market. No indication on Atlas Pipeline (APL). Friedman Billings is raising its price target to 54 bucks on APL from 52. Too low imho.
Not often we've had to focus on world events impacting an MLP but we have that this morning. Over the weekend a terror plot to blow up the pipelines to JFK Airport in New Yokr City was discovered. Here are the links to a series of stories on the subject but the pipes that run the oil from New Jersey to JFK belong to Buckeye Partners (BPL). I'm not sure what kind of impact this is going to have on the share price but my bet would be that if it sells off on the news it would provide buyers with a buying opportunity.
Not much else happening this morning news wise and no other upgrades or downgrades. The MLP index is rallying back to the old highs in the face of a ten year rate running back to nearly 5%.
So if it seems to have been discounted but i can't help but wonder when rising rates begin to squeeze MLPS. I have to think that a break through 5% will raise eyebrows and if we break above 5.25% it could let the air out of the balloon in a more serious fashion. But so far not much impact in rising rates other than forcing MLPS into a sideways pattern. I would still bet on an upside breakout.
joseph cioffi's Source Page - Associated Content
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5/29 Wachovia issued a research reporting a "pleasant surprise" for MLPs as the DC Circuit of US Court Appeals upheld a ruling that allows interstate pipelines owned within the MLP structure and FERC regulated to include income taxes in its calculation to determine pipeline tariffs. MLP's with interstate pipeline assets were up 1-3% on 5/29 onth news.
Wachovia analysts sawit as clearly positive news for the sector as itremoved regulatory uncertainty and should encourage continued investment in energy infrastructure.
Wachovie went on to theorize that this ruling should encourage those companies contemplating placing their interstate pipelines into MLP structures as more likely now.
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