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Strategies & Market Trends : Value Investing

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To: E_K_S who wrote (51019)	2/28/2013 7:02:35 PM
From: E_K_S	1 Recommendation Read Replies (2) of 78670

DPM secondary priced at $40.63/share w/ the share total increased to 11M. I picked up my starter position in the taxable account at $40.55/share. Distribution coverage is over 1.1x and w/ the proceeds used to pay down LT debt that should increase. They currently show $1.05B in debt. They should get $446M from their secondary which will reduce their LT debt by 42% to somewhere around $604M. The current yield is 6.5% which I expect to rise next year as their interest expense will be less. Also DPM has one of the lowest debt profiles in it's sector. I also expect more consolidations of the smaller NG gathers. DBM could grow their coverage area though acquisition. Eventually they should be able to bring economies of scale into their operations with such a large foot print selling long term service contracts to their East coast customers. Your paying 18x the free cash flow which is not cheap (I like 14x or less) ( $40.55/share/$2.20/share EBITDA). I do like the future growth prospects and can see their distribution above 7% next year. My last buy (in an IRA) was 2/2010 for $30.22/share. The addition of DPM plays into my NG infrastructure theme. EKS

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