MASTER LIMITED PARTNERSHIPS

Tuesday, October 07, 2008

Ugly earnings from Alcoa (AA) as they bunker down. And that means more market selling i fear.

One thing about MLPS...we are at the point now where they could rise 100% and in many cases still be far short of their 52 week highs.

6 comments:

Anonymous said...: The AA earnings in a normal market wouldn't be horrible. It would be a miss, a lousy quarter, but Alcoa wouldn't be expected to set the world on fire in any case.

In this market, it's a warning that the rest of the earnings from other industrial stocks will be weak as well.

On Sept. 8 Alcoa closed at 27.12 a share.

Alcoa closed today at 16.71 in the regular trading session.

The Alcoa call is at 5.00 est today. Dollars to doughnuts they will be asked about their access and cost of credit.

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The Reit world had a nightmare senario begin to unfold with GGP.

General Growth shares plunge on refinancing woes
Tuesday October 7, 2:46 pm ET
General Growth shares drop 48 percent on concerns about refinancing

NEW YORK (AP) -- General Growth Properties Inc. shares plunged 48 percent Tuesday on concerns the real estate investment trust may not be able to refinance its debt maturities amid the larger credit crisis.

The stock shed $3.62 to $4.13 in afternoon trading. It fell as low as $3.51 earlier in the session, eclipsing its previous 52-week low of $7.08.

"The REIT's stress is mostly due to over-leveraging acquisitions in the past five years," Stifel Nicolaus analyst David Fick said in a note to investors on Monday.

He said the company had bought too many properties using debt financing, which will soon come up for refinancing. It has also recently replaced its chief financial officer and suspended its dividend.

"The remaining 2008 mortgage maturities could prove difficult to refinance due to the large loan balances," he said. Those include $650 million at its Fashion Show Mall property and $250 million at its Palazzo property.

The analyst said there is a risk that management may have to raise money by selling shares, which would make current shareholders' holdings less valuable.

He added that there are no obvious catalysts that would force the REIT to seek bankruptcy protection, but that the unstable credit markets make the stock a risky investment nonetheless.

http://biz.yahoo.com/ap/081007/general_growth_mover.html?.v=1
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Someone on Bloomberg radio suggested that option activity indicated that the Dow might hit 8500.

HS; 10/07/2008 4:53 PM
Anonymous said...: I'm down to a few shares of CPNO.

A couple of small positions in Reit Preferreds, some Bonds, Corporates that I'd like to sell, but the bond market isn't functioning.

Some Muni bonds, and a position in 2 of Vanguard's tax free funds.

And the cash from selling everything else.

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I have to believe that only the long only mutual funds, and traders are left in this market.

HS; 10/07/2008 5:00 PM
Anonymous said...: Someone on cnbc just mentioned that if the market keeps trading down at this pace, the dow will be at zero in 19 days or so. ...something to look forward to I guess, as it won't be able to go down after that.; 10/07/2008 5:44 PM
Anonymous said...: This quote is from a Bloomberg article entitled:

U.S. Stocks Drop; S&P 500, Dow Post Worst Retreats Since 1937

I think Leon Cooperman's Omega Advisors is heavily involved with MLPs and other Energy stocks.

I think (but I'm not sure) that Omega
Advisors is one of the "PIPE" financing companies that some MLPs used as "to the disadvange" of their existing shareholders to float new stock.
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HS
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As to where the Dow ends up, who knows?
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``We've approached the edge of the cliff,'' Leon Cooperman, 65, who manages $6 billion at hedge fund Omega Advisors Inc., said at the Value Investing Congress in New York. ``Do we go over the cliff or begin to recede? History says we recede, but there's no guarantee. This is the most difficult financial environment I've lived through.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPfzxT4RMbsk&refer=home; 10/07/2008 6:11 PM
Anonymous said...: Hard to know what to say.

Harder, still, to know what to do.

Bruce; 10/07/2008 7:37 PM
Anonymous said...: Central Banks made a co-ordinated 1/2 point cut. I was watching the DJ Stoxx index prior to the annoucement and it was tracking at a place to catch up to our Tues. decline. The Brits had earlier annouced their version of a bank bail-out plan, and that helped the Stoxx from falling off a cliff.
Part of the Brit plan is to guarantee new short and medium term interbank debt to the tune of about 440 billion dollars.

Perhaps we need a interbank guarantee plan similar to the FDIC where a small fee is charged for a Fed guarantee. Perhaps this could be done via an executive order, or via the exigent circumstances clause.

I'm reminded that the word credit is derived from it's Latin root credere which means "Trust".

Maybe banks will trust each other
again with a government guarantee.

HS; 10/08/2008 7:23 AM