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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (49307)	10/26/2012 11:04:20 PM
From: Spekulatius	Read Replies (1) of 78639

I bought some NSH units today at 29.3$. The low distribution coverage for NS is scary and can end badly for the General Partner NSH but I think the management (which owns way more NSH than NS units) is pretty much stating that they want to grow out of the whole by expanding, and that means issuing more NS units, which benefits NSH (since NSH get's a share of NS cash flow). While NS cost of capital is high, I think the lower GP cut of 25% of incremental cash flow (compared to 50% for many other MLP's) makes the plan more manageable. Based on recent experience, I think NS will increase unit count by 10% annually, which will create a nice windfall for NSH. Somewhat risky, but there is a 7.3% yield, with a good chance of 10%distribution growth, due to NS unit # increases from secondaries.

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