SHOOTING FOR DOWN 13 DAYS IN A ROW
That is where we're at with Constellation Energy Partners (CEP). This is what happens when you announce you are selling 1 billion in units and don't raise your distribution. Earnings are due out next week. They better say something good!
Meanwhile this morning we've opened higher on the MLP index by a 1.50 and now have pulled back a touch. Natural Resource Partners (NRP) is up 1 and some change as the coal plays continue to get attention. Losers are few however and only showing penny losses..at least so far.
I worked an all nighter so my head is a little upside down right now. More later.
joseph cioffi's Source Page - Associated Content
5 comments:
When do the CEP shares become freely traded? I know a lot of noise has been made about the LINE shares finally hitting the market this week. Does anyone know when EROC and CEP start trading? Thanks.
Another +100 point Dow move and the MLP's are falling apart.
There is no liquidity in these things. HEP -2.30% on 5000 shares. EPB -2.50% on 17,000 shares. RGNC -2.00% on 17,000 shares.
Yield: who needs it!!!
In addition to the new and secondary offerings, I think the following factors are also weighing heavily MLPs:
1.Recession fears highlight the commodity price risk that some MLPs face. This is particularly true of E&P MLPs (which would include EROC now that they have decided--in a case of truly awful timing--to become a hybrid midstream/upstream MLP).
2.Most MLPs require significant funding for growth. The credit crunch has made financing more expensive and harder to get. Investors have to be wondering what effect this will have on growth. This even effects drop-down MLPs like DEP as investors wonder whether the credit markets will force EPD to delay any drop-downs until financing again becomes readily available for DEP.
3.Risk has become a four letter word, literally and figuratively. Some investors are shying away from anything they perceive as risky despite the need for high yields.
My bet is that the MLP market won't even begin to recover until there is progress on all of these fronts.
Bruce
I think one of the "chinks in the armor" of MLP's is the constant secondary issuance of units. Take SGLP as an example, they file to sell units and the price gets destroyed. Managers of MLP's need to get more creative with capital raising, so as not to destroy investors hard fought gains. Shorting is so easy to play in this sector, its the classic fish in a barrel and managers are too dumb or blind to see this.
You don't mention that issuance of units in general is mostly related to purchases of income producing assets. With the aquisition, comes growth and an increase in distributions.
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