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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (53456)	2/19/2014 1:25:34 PM
From: E_K_S	Read Replies (2) of 78715

Re: Calumet Specialty Products Partners LP (CLMT) I am not buying yet but have orders in at $25.44/share and lower. My avg cost is at $28.28/share so even at the current price, I am w/i 3% of the current price (a new 52wk low too). Remember, that the time to acquire "Value" stocks is when everybody else is throwing in the towel. Their current report shows sales increasing but margins decreasing which management was describing as coming back to some "normalized" rate. The thing that popped out for me are the several projects they have in process categorized as "organic growth" which come online in the next few years. I like their exposure here. Calumet also acquired Bel-Ray Company, LLC, a manufacturer and global distributor of high-performance lubricants and greases. Long term this should provide them a "pipeline" to distribute their specialty products all over the world and hopefully they can maintain their high margins. Maybe we will see a distribution cut as their present cash flows do not support their current distributions. In fact, they only covered 20% of their last quarter's payment. If/when they announce a cut, the stock will sell off. I plan to up my shares by 30% at that time. My thought is that looking out past 24 months, their organic growth projects will be contributing to revenues and should help (w/ proper management and hedges) them maintain profitable margins. I continue to like their MDU JV but as a percent of their total revenues, it's still small. MDU has a lot of storage assets that w/ the proper pipeline infrastructure, CLMT and MDU could create a Midstream operation that would make their entire refining channel very efficient (ie from well to end-user product). It's not clear if this is their ultimate vision but many of the pieces and regional footprint are there to make that happen. That's my take and longer term speculation. My position is still small about 1.5% of the taxable portfolio. If/when a MDU/CLMT Midstream project becomes reality, I will bump this up to a 4%-5% portfolio position. EKS

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