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Strategies & Market Trends : Value Investing
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To: gcrispin who wrote (57942)9/7/2016 6:22:32 PM
From: Graham Osborn  Read Replies (1) of 78704
 
I agree the NG >> crude pipelines have some moaty aspects, although overcapacity risk is not remote. But it's not that simple. One can ask the question "why are there so few Buffettlike businesses around?" And, for once, Mary Buffett has an insightful answer - the Buffettlike businesses with minimal operating leverage were levered up with financial leverage by enterprising CEOs or PE firms. You might call that the "equivalence principle" of finance - that a business with low operating leverage can be made to mimic the risk profile of a business with high operating leverage by the appropriate application of financial leverage.

SE has less debt and "project completion uncertainty" than some in the group and so is probably less risky, but I would still place it in at least the moderate risk category. I haven't looked at SE's distribution bylaws in detail but these are rarely simple.

I will say that I am short LNG because it represents the "worst of all [above] worlds" and leave it at that.
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