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Wednesday, February 23, 2011


This was a no brainer when you think about it. With Dan Duncan gone and the fact that its really just putting together all the parts officially, Enterprise is offering $42 per Duncan share based on the average closing price of the stock in the last 10 days. The charts of the two stocks are wonders to behold as they have. Duncan has doubled since mid 2009 and it will jump another 7 or 8 points at the open as the stock closed yesterday at 32. Enterprise will probably sell of a bit in the arbitrage. The question then becomes who is next. One could say that since this was bound to happen anyway as the late Dan Duncan controlled both companies; still one can look around and get ideas. For one thing there is the trend of the LP's buying back the GPs and for that we have Nustar (NS) and Nustar Holdings (NSH). The CEO of NS owns millions of shares of NSH so it could happen. And we also have Energy Transfer Partners (ETP) and Energy Transfer Equity(ETE) and they have a piece of Regency Partners (RGNC). Im not saying these things repeat but some traders might think along those lines and give some of these things a goose at least at the start. Also since Enterprise is such a huge component of the MLP index, it might be a drag down on the index given the arbitrage with Duncan. So we will that distortion to deal with when the index prints out prices today.

All in the name of rising stock prices Enbridge Energy Partners (EEP) is announcing something that happens when your stock goes up in split it 2 for 1! We don't see stock splits in this group to often and while its really meaningless in terms of wealth, it does make shareholders feel good.

When all the Egypt news first broke we saw a 1 day stock market sell off which the market got back in the next 2 days. This morning stock futures are starting 5 points firm on the S&P. Crude is a little higher at just under 95 bucks. Saw a 10 cent rise in gasoline around the neighborhood yesterday. The Euro is up this morning along with bond yields as the fight to safety trade comes off a little. Nat gas does what it always does..down in the pre open. No other corporate news and no upgrades or downgrades at this time.


jcarroll1948 said...

Joe. DEP is, obviously, up big today; however, not quite to the $42/unit valuation of the take over bid. Can you offer any thoughts on deciding what to do from here with units of a company being acquired, with a nice gain? Take the money and run (i.e, sell) is compelling; however, the price per unit is still short of the offering valuation, and there are taxes to pay on the gain. Nice quandary.

joewxman said...

Since it is a stock swap it assumes the stock percentage is based on the 42 dollar figure. All is fine unless we get some sort of catyclismic market event that causes all mlps to go sharply lower.

my tendency is given market might be wise to take some money off the table. And i never worry too much about tax implications since too many people dont sell because they dont want to pay taxes. Then they wake up one day in a bear market and find that the market has relieved them of that burden.

Max said...

Holy shit batman! Nomura Securities is putting out a call that oil could go to $220/barrel if there is a disruption in Libyan and Algerian oil shipments. At least half of Libya's oil production has already been shut down.

joewxman said...

Don't worry Robin...we'll invade!!! And btw doesnt Momar look like the joker after a night of drinking?

Max said...

Joe (aka Robin),

Invade with what? As I write this my son is on his 3rd tour in Afghanistan. He just got back the last time in April '10, got married in June, and re-deployed this past Aug '10. Our kids and military equipment are worn out.

Instead, let's just invade Mexico. It's a failed state; they all want to live here anyway; it's been recently confirmed that Hezbollah terrorists are sneaking across; and we need the oil. Win, win.