The mlp index is down 1.34 which really isn't much on a down market day. Dow down 120 as i type.
DCP Midstream leads the winners list as its up over 19 bucks and ahead by 90 cents. Morgan Stanley raised the stock to equal weight from underweight. Inergy Holdings (NRGP) is up 80 cents and over 38 bucks.
On the losing side, K-Sea (KSP) is down 1 and change as the biggest loser but its the only one losing more than 1 point. Some of the coal mlps like Alliance Resource (ARLP) and Natural Resource (NRP) are down major fractions.
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- joewxman
- a meteorologist with a knack for trading and investing in MLPS! I also like horse racing, enjoy cigars and a good port wine.
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7 comments:
From all indications, I suspect agricultural products are going to go through the roof on the back half of the year as the full force and effect of a disappointing harvest season becomes apparent. The credit mess has put the kibosh on loans to farmers causing many to cut back where they can, including planting just one crop instead of two or more, among other cost savings stop-gap measures. Food supplies are already low because of the credit situation and exacerbated by severe draughts both here and abroad. China, for instance, is forecasting that roughly one third of their crops are in trouble because of draught there. As investors in general and MLPers in particular, one way to play this is with Terra Nitrogen (“TNH”), a fertilizer company structured as an MLP. I suspect that when Wall Street comes out from under the ether on this issue, fertilizer will be a hot commodity. Just a thought…
Speaking of thoughts, I have one more I’d like to share under the category of “for what it’s worth.” The “Speaking of Dividends” column of Barron’s this week covered a money management firm in Woodstock, NY that I am very familiar with as I am an investor there. The company, Miller-Howard Investments, specializes in various investment strategies all with the common theme of producing dependable, growing income streams for their clients. As a client of theirs for some time, I made the pilgrimage to Woodstock in January of ’08 to meet them and get a better sense of who they are. In addition to being extremely impressed, I also resolved to increase my exposure to them by convincing them to construct and manage a portfolio comprised exclusively of MLPs. (At the time they did not have a strategy devoted exclusively to MLPs, so my account was something of a pioneer account. However, now they do have an MLP strategy as one of their offerings.) Anyway, at the risk of sounding like an advertisement, I am extremely impressed with their performance. Last year my Miller-Howard MLP account substantially beat the MLP account I manage on my own ON A NET AFTER FEES BASIS. Again this year, they are once again outperforming the MLP account I manage by roughly 5% net! Frankly, in a weird way, that irritates me because I spend a lot of time conducting due diligence and beating them has become something of a game to me. Anyway, I thought I’d pass this on in case anyone is looking for a great MLP management firm that flies under the radar.
Lee
If credit is tight, how do farmers buy more seed and fertilizer
Softpawn,
They're cutting back on seed and fertilzer now which is one of the reasons the supply of food is shrinking and will shrink more over time. Combined with global droughts, there is a scramble on already in parts of the world to invest in agricultural components like seed and fertizler. China, Qatar, the UAE, and Kuwait, to name a few, are already committing large sums from their respective sovereign wealth funds to do exactly that. I believe more will follow suit.
Econonic slumps give people some latitude in cutting back on even "essential" commodities like energy related products which is why we have witnessed some level of demand destruction in them. Companies produce less, people travel less, etc. which translates into less consumption. But you can't say the same for food. If people don't eat, they die. That's why the scramble is on and, in my opinion, will intensify. And it's why I think TNH (and a whole host of other non-MLP agricultural companies) have a better than even chance of outperforming the second half of this year.
Lee
Lee,
I agree w/ you re. your agriculture points. I've been in and out of TRA, and I currently own SQM, a major S. American fertilizer company as well as DBA, an agricultural ETF. SQM, in addition to being a major fertilizer producer, is also one of the world's biggest producers of lithium, a major component in hybrid vehicle batteries.
Max,
SQM is a GREAT company. I also like CNH Global, Agrium, Deere, Monsanto, and Potash in addition to Tera Nitrogen. Buy 'em, hold 'em, and watch your net worth "grow."
Lee
Of course if you are wrong your investments will turn to "shit" !
Sorry..couldn't resist.
Joe,
That's what I love about these ag stocks. No matter what happens ... grow, shit, or draw... you win!
Lee
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