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Strategies & Market Trends : Value Investing
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To: E_K_S who wrote (51712)6/14/2013 8:18:28 AM
From: Spekulatius  Read Replies (2) of 78753
 
I bought a small position in NSH, which owns NS units and the IDR for NS. It yields 8% which is cheap for an MLP GP, but the problem is, that NS does not cover it's distribution. Analysts hate NS, since they missed estimates. NS/NSH is restructuring, as they sold the majority of their ill fated Asphalt operation (they still own a minority stake) and the fuel refinery. This freed up some capital that is now invested in Eagle Ford pipeline operation, where they had more or less underutilized assets that are now being deployed to move the crude in.

Management claims that they will cover their distribution by the end of the year (last quarter the coverage was a pathetic 60%), but analyst don't believe it. The CEO Greehey put's his money where his mouth is and buys a lot of units consistently:

finance.yahoo.com

I think NSH is undervalued relative to NS, if you believe that NS can be growing again. With NSH 1.08B$ market cap, approx 1/2 of thr market cap is covered by the value of NS units they are holding, Nd 1/2 is the value of the IDR (which is 25% of NS incremental cash flow). The nice thing about owning IDR/GP units is that they will get the cut from future NS units (if any are issued) without incurring dilution (free ride on future growth).

phx.corporate-ir.net
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