MAGELLAN REPAIRS
BUT NOT MUCH ELSE.
Magellan Midstream had some fire issues at its Kansas City terminal but that seems to be resolved. I'm not sure if thats the reason why Magellan Holdings (MGG) took a hit the other day. Sometimes this stuff moves on this news and sometimes it doesn't. That takes care of the morning news as the corporate offices remain rather quiet in MLP land. A deal might be nice but otherwise its pretty quiet. UBS this morning starts coverage on Genesis LP (GEL) at...get ready folks....neutral.
Yesterday the MLP index took at hit as the XOI (big oil) dropped over 3%. As noted last night a few issues took 1 point plus hits but not everything in the group was down. The mlp index continues to base along. 290 is a critical place as always.. There is a firm tone in the futures this morning so i think we should see a firm beginning in the group.
Now as per crude using the USO we are at a place where you could have bought before and made money. First support here at 98 which in my view is not going to hold and we could be headed down to the lower moving averages at 90 or so which would correspond to 110 crude. Maybe not all in one day mind you and intraday rallies continue to remain probable.
I posted last night that the Nustar charts are beginning to look interesting to me. Nustar (NS) and Nustar Holdings (NSH) are carving out what looks like a triple bottom and if oil comes off it would stand to reason that margins here could widen. Looks like Nustar has endured the same problems that Valero (VLO) and the other refiners have had to deal with.
Constellation Energy Partners (CEP) came up to an important breakout point yesterday which is around 22 and got turned back but the selling was light and on miniscule volume. The chart to me looks like its going to breakout soon and a close over 22 on volume could set us up for a run to 25-27 in a hurry...no guarantees but i am long and it looks like the sellers are done here.
joseph cioffi's Source Page - Associated Content
13 comments:
Joe, the weakness in Nustar is all about this asphalt business they acquired. You won't get any real transparency on this deal for another couple of quarters. And the hedging losses they recently took hasn't helped management's credibility either. You would think this price level has factored in this news, but we'll see.
80% of Nustar's business is still pipelines, storage and terminalling. The fear over ashpalt is overdone. I picked some up yesterday. I'll sit on the 8.40% yield until things improve.
Mr. Pipes
In one month every FERC pipeline will be raising tariffs by PPI+1.3%. Correct me if I am wrong, but PPI is running at about 6.5% so that gives every interstate pipeline a 7.80% tarriff boost. Not a bad kicker and this should make up for the expected small decrease in product shipments.
Mr. Pipes
I agree with Mr.Pipes. I also picked up some NS yesterday. One additional factor to consider is that later this year NS will likely boost its distributions by 8-10% so today's 8.4% yield goes to over 9% (based on today's unit price).
Bruce
I think the management team at NS is doing a horrible job of explaining the rationale for this deal and how it fits with an MLP structure. Having said that I do think the asphalt fears are way overdone. They got the refining assets cheaply and ultimately I think they'll squeeze alot of distibutable income out of them.
If someone out there has a different view pls share it.
MLP's just cant seem to gain any traction here. We gain a bit give back a bit and really go nowhere.
Explosive move in the indices today, too bad my screen is a sea of red...
Nustar is down because investors are afraid of its asphalt business...and you think it's an attractive investment because of it has reached a "triple bottom" ?????
Anonymous said...
Nustar is down because investors are afraid of its asphalt business...and you think it's an attractive investment because of it has reached a "triple bottom" ?????
Have you read any of the posts this morning? You are an idiot!
Yes i read the posts this morning and the chart action up until now reflects that. Since as far as i know you can't hindsight trade maybe the action in the chart is in the process of discounting the ashphalt issues..the gasoline refinery issues with regards to margins..etc etc etc.
Lets see where the stock price is 6months from now and see who the idiot really is. That btw is not a buy recommendation.
And btw have the decency of posting with a name and not anonymous.
I don't post much on this board, but I read it daily. Many of you make fine contributions. If I wanted to see someone called an idiot, I would be on yahoo. Please try to keep it civil.
I believe part of the concern about NU is the quixotic nature of Ugo Chavez. All of the crude that NU refines for its asphalt business comes from Venezuela and its refineries can only use that type of crude economically. Hence, the marking down. I've owned NU since 2004 and don't intend on selling - yet. But, if management can't come up with something more persuasive in the near future, I many trade a 9% yield for something like more CEP or LINN, both of which I already hold.
steve
Nustar factoids:
The price is back to where it was in 2004.
2004 Revs $220mil
Dist $3.20
2007 Revs $1,475mil
Dist $3.835
Seems like a fair bit of value creation to me.
Let it come off, I'll buy more.
Asphalt, Smasphalt.
Mr.Pipes
"Let it come off, I'll buy more."
Me, too, Mr. Pipes. I can't say where the bottom is, but I strongly suspect that a few years down the road, my only regret will be not having purchased more NS at these prices.
In fact, it doesn't always take so long: A few months ago, I took a full position in MWE at an average cost of a bit less than $30. MWE has since rallied by about 20%, giving me a nice cushion in what I view as a long-term hold.
Bruce
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