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Tuesday, December 30, 2008


The year that is. Just 2 trading days lefft. Stocks have been following a pattern of flat to slightly higher opens followed by selloffs of about 100 points or so and then rallies back in the last hour. MLPS have held up okay through all this as we hover just under 170 on the index. Year end distortions continue and it looks like we have a higher open again this morning so we'll see where that takes us.

Not much happening otherwise today.Linn Energy (LINE) held on to most of its gain yesterday after the Barron's piece. Otherwise most stocks in the group spent the day in relatively tight ranges. No corporate developements this morning and no upgrades or downgrades so far.

I've been trying to come up with a list of mlps that are likely to maintain distributions based on the stock action but i can''t seem to be to confident about it. Sure Kinder Morgan (KMP) Nustar (NS) Oneok (OKS) and a few others are obvious. I'm trying to figure out the ones in the middle where their stock prices are trading somewhere in the teens and there is an element of guessing here. The cut list in my view includes the following.

Atlas Pipeline Partners (APL)
Atlas Pipeline Holdings (AHD)
Breitburn (BBEP)
Constellation Energy Partners (CEP)*
Crosstex LP (XTEX)
Crosstex (XTXI)
Eagle Rock Energy Partners (EROC)
Hiland Partners (HLND)
Hiland Holdings (HPGP)
Markwest (MWE)
Quest Energy Partners (QELP)

*Constellation has already recommended to the board a cut from 56 cents to 13 cents.

Again these are stocks whose price action indicates a cut is imminent. The ones that are tougher to figure out include

Copano (CPNO)
Exterran (EXLP)
Genesis (GEL)
Regency (RGNC)
Penn Virginia (PVR)
Penn Virginia Holdings (PVG)
Targa Resources (NGLS)
Williams (WPZ)

There is potential for a big up move in any and all of these if (and its a big if) a few things happen in January. The first is the easing of credit conditions...and the second it that corporate conditions improve to allow those on the fence to keep distributions intact and that they are safe going foward. Third...a rally in the energy complex would help. And of course the market overall needs to put together a significant rally. Then of course many of these companies could cut and then the stocks could rally anyway if the market has the view that the worst is priced in.

Okay bettors...the casino is open...prepare to place your bets.


Bruce said...

Despite the company's statements, I'd put DPM (which I own) on the tough to figure out list.


joewxman said...

up until a few days ago i would have disagreed but the price drop back to an 8 handle leaves me suspicous.