EAGLE ROCK HIKES BUT US SHIPPING WARNS
IT MIGHT HAVE TO (GASP!) CUT!
As a rule i do not like up opens after big sell-offs. I would rather they take em down a couple of hundred points and wash out all the sellers instead of risking sellers coming in and selling into the rally. MLPS remain tied to the market with an umbilical cord. I wonder whether all this selling in financial stocks might put our group in the front of the line for money if a flight to quality occurs. I certainly would rather be in any one of a dozen MLP's then say Citigroup for example.
Some items from yesterday and last night. US Shipping (USS) was down hard to 16 bucks a share and yields a whopping 11% as the company announced earnings and indicated the possibilty that the distribution was at risk. Shareholders decided to shoot first and ask questions later. Also check out the comments section from yesterday for more info. Eagle Rock Partners (EROC) is giving unitholders a 0.005 increase (love those half cent hikes) and promised a 2.5 cent hike next time around. Should put a floor under the stock today.
This morning we have earnings frmo Constellation Energy Partners (CEP) which look good. Also numbers from Crosstex LP (XTEX) and Legacy Partners (LGCY) who btw also did a private placement. Global Partners(GLP) puts up its quarterly numbers as well. Finally Genesis LP (GEL) posted its quarterly results.
No upgrades or downgrades this morning so far. Crude is a little higher this morning but below 100 bucks. Another interesting day ahead so fasten your seat belts.
joseph cioffi's Source Page - Associated Content
5 comments:
Wachovia upgrades epe. Just headline, no details yet.
USS continues to plummet. It is yielding about 12.5% as I type this, assuming that the distribution remains intact. It's interesting that the market is now pricing it to have a yield comparable with NAT and FRO -- two ultra-yield petroleum shippers. The difference here is that these guys are serving a different market, not Jones Act protected, not setup as MLPs, and have an established history of widely fluctuating dividends. Investors buy these with the understanding that high yields are not likely to be sustainable. This is not the USS business plan as I understand it, yet the market appears to have dropped it into this investment class.
its trading at 14.5%. Am I crazy to take a position ?
A 50% distribution payment cut (could it possibly be THAT bad???) still leaves you with a 7% annual yield. Is the market anticipating complete elimination of the distribution? Pending bankruptcy? All that happened yesterday was discussion of `what ifs' in the earnings briefing. This shows you how crucial the perceived reliability of distributions are in this sector.
CITI came out with an extremely bearish report with a price target of 14. Its trading at 12.5 now! Are we missing something?
Post a Comment